Scarcity of affordable housing in Doha

by  — 17 March 2013

Aziz Sharif discusses the reasons why expatriates are paying a higher amount on rent today.

Aziz Sharif, managing partner of Mannzili says that the influx of people employed to execute the various large-scale infrastructure projects led by the World Cup and the National 2030 Vision has resulted in the affordable housing segment becoming overwhelmed.

According to the CIA Fact Book website, 2012 had the highest population growth in the world, combined with a consumer price index where rent accounts for 32.2 percent of the basket. So, you can see why price sensitivities should be highly elastic, which means as rent accounts for a higher portion of income, people would naturally seek to minimise it to save more. It is true that people will pay what they must to have a place in which to live, but affordable housing is fast becoming a scarce commodity in Qatar. Expatriates, today, are spending a higher amount on rent in proportion to their income than in the previous decades. I personally remember when you could rent a decent villa for under QR5,000 in 2003 and today it is close to QR12,000. That is a 240 percent increase in price. By contrast, the inflation rate from 2006 to 2012 is closer to 4.8 percent per annum based on Qatar Statistics Authority (QSA) figures. The QSA has reported that the population of Qatar reached 1.9 million this January. That is three years ahead of the QSA’s projections, which had the population reaching these levels in 2016. The influx of people employed to execute various large-scale infrastructure projects led by the World Cup and the National 2030 Vision has resulted in the affordable housing segment becoming overwhelmed.

In 2003, the average monthly rent for a decent villa was under QR5000. Today, it is nearly QR12,000.

Besides the inflationary effects of this condition, actions taken immediately will require a substantial amount of time to bear fruit. The government has taken actions to lead the development of initiative in areas such as Abu Humour and Bu Sidra. Quasi-governmental entities like Barwa Real Estate have developed projects such as Barwa City and Barwa Village. Unfortunately, this is not enough. The basis of such projects were planned with the forecast of Qatar’s population growing at rate at which the population would reach 1.9 million by 2016 and not early 2013. There are a number of economic issues that are currently being experienced
which have emerged due to this under-supply. Housing supply constraints will inevitably lead to increasing labour costs, project cost overruns and immense inflationary pressure.

Conversely, an increase in the supply of affordable housing would have a number of benefits. Outside of the obvious, the retail and hospitality ramp up to the World Cup would enjoy increased stability. 

What could be possible solutions to this seemingly daunting problem? Increasing the number of projects similar to Barwa City must become more of a priority. However, the private sector must also be incentivised to deliver properties aimed at this price point by opening up the market to foreign ownership. The potential of foreign ownership to develop this segment of the market is often underestimated. This is evidenced by developments such as The Pearl-Qatar; based on the belief that well paid expatriates would be willing to pay a premium for luxury property by the sea. I believe that the majority of expatriates willing to invest in property in Qatar have been overlooked. Although the premiums would not be the same, property developers could make their returns while also rectifying a serious issue brought about due to the lack of affordable housing.

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  • Bee

    Interesting article!



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