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QUARTERREVIEW

2018

st

Qatar Real Estate Market

VPIValuStrat Price Index

ResidentialSince the ValuStrat Price Index (VPI) began tracking in January 2016, Qatar residential prices have witnessed a fall in values. By benchmarking the index from Q1 2016 at 100 points, we found that values continue to fall displaying market corrections nationwide.

The first quarter 2018 VPI displayed overall 9.4% annual and 1.6% quarterly declines. Villas and freehold apartments saw quarterly price declines of 1.6% and 1.7%, respectively. Whilst a few locations saw marginal declines, others experienced steeper falls. Quarterly capital depreciation between 0.4% and 2.7% was seen in clusters of Al Wakrah, Al Khor, Umm Salal Mohammad, Old Airport, Al Thumama, Al Waab, West Bay Lagoon, New Al Rayyan/Muaither and declines of 4% to 4.4% were seen in Ain Khalid/Abu Hamour and Umm Salal Ali. Gross yields for residential units averaged at 4.8%, with 6.0% for apartments and 4.2% for villas.

Source: ValuStrat

ValuStrat Price Index13 Villa and 3 Apartment Locations in Qatar[Base: Q1 2016=100]

60

80

100

120

2016 2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

96.394.2

90.9 89.887.2

84.982.7

81.3

100

1 | Qatar Real Estate Market 1st Quarter 2018 Review

MacroEconomicSnapshot

• Qatar Central Bank increased deposit rate by 25 basis points after US Federal Funds rate increment by the same amount• International Monetary Fund (IMF) forecasted GDP to grow by 2.6% during 2018 based on Qatar’s move to increase gas production by 30%• In line with a 20% increase in oil prices, oil export revenues and imports expanded 23.3% YoY and 4.2% YoY, respectively • The Consumer Price Index (CPI) decreased 0.5% YoY and increased 0.37% QoQ. Transport, Education, Food & Beverage and Health were the main drivers of quarterly inflation• Housing and Utility Expenses Index decreased 5.2% YoY and 0.5% QoQ

• Government launched a second National Development Strategy (2017-2022) in which they prioritised six sectors; manufacturing, tourism, logistics, financial services, information and communication and scientific research

• Real Gross Domestic Product (GDP) increased 1.8% YoY (QAR 204.2 billion), driven by growth in non-hydrocarbon sector of 3.7% YoY in Q4 2017 - latest estimates released by Ministry of Development Planning and Statistics

• Population is estimated at 2.68 million

Consumer Price Index vs. Housing IndexJanuary 2015 – YTD

General Index (2013=100)

Housing, Water, Electricity, Gas and Other Fuels

Source: Ministry of Development Planning & Statistics

2015 2016 2017 2018

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec Jan

20121,836,000

20132,045,000

20142,235,000

20152,421,000

20162,597,000

20172,641,000

2018-Q12,685,000

Qatar PopulationSource: Ministry of Development Planning & Statistics

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• Total housing stock by the end of 2017 was approximately 286,125 units. For Q1 2018, nearly 1,200 units were added

• Apartment supply consisted of 960 units coming from new additions in Lusail, Fereej Bin Mahmoud, Al Sadd and Najma

• Completion of villa compounds in Ain Khalid, Al Maamoura and Umm Salal Ali added 240 new units to the total stock

• An estimated 13,000 units are projected to be completed by the end of 2018, assuming no construction delays. These include 14 high rise apartment blocks on The Pearl and 36 apartment buildings in Lusail

• YoY and QoQ median transacted prices for residential houses reduced by 5.67%

• Transaction volume for houses declined 14% YoY and 13% QoQ

• Total value of housing transactions amounted to QAR 1.4 million. The five largest ticket sizes were seen in The Pearl, Muraikh, New Al Salata, Rawdhat Al Hamama and Al Mashaf for developed plots ranging from 1,500 sq m to 7,500 sq m

• Majority of transactions were in Al Rayyan (29%) followed by Doha (21%), Al Daayen (20%) and Umm Salal (12%)

• There were 30 transactions for residential buildings with 45% transactions above the median ticket price (QAR 9,000,000) concentrated in The Pearl, Fereej Abdul Aziz and Old Airport

Qatar Residential Supply2015-2019(‘000 UNITS)

Source: Ministry of Development Planning and Statistics, MEED Projects, ValuStrat

*May be subject to significant downward adjustment depending on construction delays

467

ExistingExpected Supply*

ResidentialSupply

ResidentialSales

2019

E

2018E

2017

2016

2015

275

280

286

28614.2

3005.4

Source: Ministry of Justice, ValuStrat

Residential Median Transacted Prices

3 | Qatar Real Estate Market 1st Quarter 2018 Review

-5.7%Last Quarter

-5.7%Last Year

1%Last 6 Months

150

200

250

300

350

400

150

200

250

300

350

400

• Compared to 2017, median asking rents declined 11.8% YoY and 3% QoQ• Median monthly asking rents for apartments fell by 2% QoQ. The highest quarterly fall in rentals was seen in West Bay, Old Airport, Lusail and Al Sadd• Median monthly asking rents for villas fell by 7% QoQ• Mid quality villa locations experienced the highest quarterly decline ranging from 5% to 11% • An emerging flight to quality is becoming apparent as QoQ falls in rental values appear steeper in secondary locations as compared to high end neighbourhoods, as more tenants vacate and trade up• Typical monthly leasing rates for a two bedroom apartment are QAR 9,500-17,000 in The Pearl and QAR 6,000-9,000 in Lusail

ResidentialRents

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Source: ValuStrat

Residential Asking Rents

-11.8%Last Year

-6%Last 6 Months

-3%Last Quarter

Median Monthly Asking Rent (QAR)&Quarterly Change (%) - Apartments

Source: ValuStrat

One Bedroom

Two Bedroom

Three Bedroom

Quarterly Change (%)

The Pearl

Al Sadd

Al Mansoura

Lusail

Fereej BinMahmoud

11,000

9,000

14,000

7,250

6,750

9,750

8,000

7,500

9,250

7,500

6,250

9,000

6,250

6,000

6,500

-4%

-3%

0%

-1%

-3%

Median Monthly Asking Rent (QAR)& Quarterly Change (%) - Villas

Source: ValuStrat

Three Bedroom

Four Bedroom

Five Bedroom

Quarterly Change (%)

Al Muraikh

Al Waab

Abu Hamour

Al Wakrah

West Bay Lagoon

11,750

11,000

14,000

15,000

13,000

16,000

20,000

18,250

23,000

9,000

8,000

12,500

13,000

10,000

14,500

-7%

-6%

11%

-5%

4%

• Compared to 2017, median office asking rents fell 17.5% YoY and 9% QoQ

• Median asking rents per sq m per month in West Bay were QAR 145, while QAR 122 in C/D Ring Roads and QAR 117 in Lusail

• Al Sadd witnessed a significant drop in QoQ median asking rents, resulting from below market listing prices on new space being used to help encourage occupancy rates

• Citywide increases in vacancies, and new supply stock, is creating downward pressure on office rentals in secondary locations

OfficePerformance

Qatar Office Supply2015-2019(Million sq m GLA)

Source: MEED Projects, ValuStrat

Existing Stock Expected Supply

2015 2016 2017 2018E 2019E

3.03.5

3.89

0.96

3.89

0.58

4.85

OfficeSupply• As of Q1 2018, the total estimated Gross Leasable Area (GLA) of Qatar’s office supply stood at 3.94 million sq m

• Five office buildings were added this quarter with two in Lusail (Energy City) and one each in Fereej Bin Mahmoud, Al Muntazah (C Ring Road) and Al Aziziya (Salwa Road), comprising 50,000 sq m GLA

• An estimated 910,000 sq m is in the 2018 pipeline, with at least 70% concentrated in Lusail

Office Median Asking Rent (QAR/sq m)and Quarterly Change (%)

Source: ValuStrat

Median Asking Rate (QAR/sq m) Quarterly Change (%)

West Bay

145

Lusail

117

SalwaRoad

95

Citywide

110

GrandHammadAvenue

105

C/D RingRoad

122

Al Sadd

100

0% 2% -6% 9% -11% -17% 0%

5 | Qatar Real Estate Market 1st Quarter 2018 Review

• Palms Mall (6,384 sq m GLA) in Muaither was completed, expected to feature 32 retail units, 12 restaurants and an entertainment centre • Tawar Mall was officially launched comprising 91,000 sq m GLA • As of Q1 2018, total supply of organised retail space reached 1.76 million sq m, with 415,000 sq m GLA (5 malls) in the pipeline for the remaining quarters • Approximately 100,000 sq m GLA of unorganised retail space (street retail stores, supermarkets and traditional souqs) is projected for completion by end of 2018 • Based on GLA and population figures, shopping centre GLA of Qatar is 667 sq m per 1,000 capita compared to the GCC average of 580 sq m per 1,000 capita

RetailSupply

• Local companies accounted for 33% of e-commerce transactions (QAR 4.7 billion) in 2017, as per latest statistics released by Ministry of Transport and Communications • The 2nd edition of Shop Qatar festival resulted in increased footfall in all 13 participating super regional and regional malls • Despite an influx of supply, rents and occupancy rates remained stable among prime shopping destinations• Median monthly rents per sq m were QAR 400 for small line shops (less than 100 sq m) and QAR 280 for large line shops (250-500 sq m)• Effective rents were negatively impacted by landlords offering increased incentives to existing tenants, in an effort to maintain occupancy rates in the midst of increased competition from new supply

RetailDemand&Performance

Retail Malls & Shopping Centres(‘000 sq m GLA)

Source: ValuStrat

Existing Stock Expected Supply (till 2019)

22

16130

6

Neighbourhood3k-10k sq m

Community10k-30k sq m

Regional30k-90k sq m

197

591

Super Regional> 90k sq m

981

330

Source: ValuStrat

Al Khor Al Wakra Umm Salal

Al RayyanDoha

41%

38%

3% 3%

15%

Distribution of GLA of ShoppingCenters/Malls Across Municipalities

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• Total number of hotel rooms and apartments stood at 26,246 keys within 134 establishments• Approximately 50% of total hotel stock is 5-star, followed by 4-star (37%) and 3-star (11%)• Total hotel rooms expected to reach 32,645 by year end, with supply coming from 24 hospitality projects currently under construction (46% are 5-star rated)• Two hotels have been re-branded: M Doha Hotel in West Bay as Crowne Plaza Doha West Bay (317 rooms) and Movenpick Al Aziziya as Al Aziziya Boutique Hotel (140 keys)

HotelSupply

• Total number of visitors during first two months of 2018 was approximately 347,000, down 40% YoY • In a bid to attract more tourists, Qatar Tourism Authority is planning 130 business events locally and 12 internationally this year• As per QTA, there was 84% increase in visitors from Germany during the first two months of Q1 2018• Average hotel occupancy retreated 9% YoY, with the exception of 3-star hotels which experienced a rise of 1.5% YoY• Hotel apartments experienced a 9% YoY rise in occupancy• Average Daily Rate (ADR) and Revenue per Available Room (RevPAR) declined 14.5% YoY and 23% YoY, respectively. While hotel apartments reduced by 15.5% YoY and 7% YoY

HotelPerformance

GCC

Europe

Other Asia inc/Oceania

Americas

Other Arab

Other Africa

Distribution of Qatar Visitors by RegionFeb 2017-Feb 2018

Hotel Room Supply2015-2019(‘000 KEYS)

Source: Qatar Tourism Authority, ValuStrat

Hotel & Service Apt Rooms Expected Supply

2015

20.726.2

2017

22.9

2016

26.2

6.4

2018E

32.6

2019E

2.2

Source: Ministry of Development Planning & Statistics, ValuStrat

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec Ja

n

Feb

6%

24%

21%

1%7%

41%

6%

20%

23%

1%7%

43%

5%

16%

22%

1%7%

49%

9%6%

16%

29%

1%9%

39%

31%

39%

3%7%

11%

19%

39%

2%

9%

20%

12%

25%

35%

5%

7%

16%

9%

26%

35%

4%

7%

19%

8%

35%

38%

2%6%

11%

8%

24%

37%

4%

6%

21%

8%

29%

41%

3%6%

13% 11%

9%

32%

39%

4%6%

10%

9%

34%

37%

3%6%

11%

7 | Qatar Real Estate Market 1st Quarter 2018 Review

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb

• Driven by growth in food, refined petroleum and chemical products, manufacturing output rose by 4.5% YoY during first two months of 2018, as per latest Industrial Production Index published by MDPS• Phase 1 of Aramex logistical facility in South of Doha, launched by Al Meera was completed adding 20,000 sq m built up area of warehousing space• Al Asmakh Logistics Park in Bu Fasila and Mustawdaat logistic project in Umm Shahraine were completed, adding approximately 500,000 sq m built up area of warehousing space • A 35,000 sq m temperature-controlled warehouse facility in Al Thumama was launched by Milaha• A logistic park in Al Wakrah, covering an area of 1,583 plots (6.3 million sq m) that encompasses three areas, is projected to be completed by end of 2018

Warehouses Asking Rental Rates(QAR/sq m)

Source: ValuStratRent - Upper Range Rent - Lower Range

IndustrialInvestment/Supply

IndustrialPerformance Industrial Area. QoQ rents for such warehouses in Old Industrial Area reduced by 11%, while remained stable in New Industrial Area• Rents in Sailiya and Birkat Al Awamer softened by 5% QoQ, ranging between QAR 12-40 per sq m per month• Bu Sulba Warehousing Park has achieved 70% occupancy within one year• Average asking rents for cold storage being leased on per unit basis was QAR 15,000-20,000 per month in Doha Industrial Area with average unit size ranging from 50-80 sq m

• In line with Ministry of Transport and Communications aim to capture 35% of trade in the Middle East by 2019, cargo traffic at Hamad Port has gradually increased, peaking in January since its launch. Underlining a smooth supply of goods and increasing demand for logistical and warehouse space• Average asking rents for dry/ambient warehouses in Doha Industrial area reduced by 6% QoQ and 17% YoY • Influx of new warehouses in rent regulated logistical parks negatively impacted rentals of older dry/ambient warehouses in Doha

Industrial Production IndexQ1 2016 – YTD

IPI (2013=100)

Mining and Quarrying

Manufacturing

Source: Ministry of Development Planning & Statistics, ValuStrat

2016 2017 2018

25

12

Sailiya

30

15

Wukair

65

20

New Industrial Area

65

20

Old Industrial Area

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23.04.1820.11.17

18.01.18

Realty market in Qatar sees heightened supply activity across sectors

ValuStrat Qatar General Manager Pawel Banach MRICS said ’Amid regional challenges, 2017 ended on a high note with the value of real estate transactions reaching QR32.7 billion, 20 percent higher than 2016. Signs of stability were also experienced in transacted prices of residential properties

Boom in hospitality sector as number of hotels nearly double

The ValuStrat report early last year had said that Rotana announced two new hotels, Downtown Arjaan and Plaza

Rayhaan to open by 2019. Around 1.94 million visitors from across the globe visited Qatar until October 2017. The growth was the result of steps taken by concerned authorities to promote tourism industry and putting the

country in the global tourism map of the world. “ ValuStrat Noted

07.01.18

ValuStrat debuts Qatar Residential Index - First quarter shows signs of continued

Currently, the Ministry of Justice records transactions in majority of the areas, however, it is not always possible to filter the statistics into usable components. ValuStrat recognised the importance of constructing a representative quarterly price index that captures near real-time pricing, complimenting official transactional data. …’ explains Pawel Banach MRICS-General Manager

9 | Qatar Real Estate Market 1st Quarter 2018 Review

ValuStrat Qatar is part of a leading consulting firm providing Advisory, Valuation, Research, Due Diligence, and Divestment services across a diverse range of industry sectors since 1977. ValuStrat’s office network provides services to over 800 corporate clients including financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups.Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport, and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.

ValuStrat is a firm regulated by RICS

VPIValuStrat Price Index

The ValuStrat Price Index for Qatar’s residential sector is constructed to represent the quarterly price change experienced by typical residential units within Qatar. The VPI uses a weighted sample representing influential locations across the city and is built by our expert RICS Registered Valuers.

Research MethodologyEvery effort has been made to ensure the accuracy ofthis document. New supply data covers all the eight municipalities of Qatar. Only completed and under construction projects are included. The new supply data does not include announced projects, and projects indesign phase. The new supply database does not takeinto account most private building projects. Prices are calculated from actual transactions extracted from the Ministry of Justice data that have been carefully cleansedto exclude duplicates and outliers. Rental data is derived from carefully chosen listings from predetermined areas and districts for commercial and residential properties.

Copyright © ValuStrat LLC 2018This document is the property of ValuStrat LLC and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat LLC. We welcome your constructive feedback and any corrections that may need to be made to this document. ValuStrat LLC does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.

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