(MENAFN- The Peninsula) Qatar's real estate price value gains have softened a bit in December 2014 compared to the previous month. Qatar Central Bank's (QCB) updated real estate price index, which tracks Qatar's real estate market value, declined 3 percent in December on month-on-month basis.
QCB's real estate price index declined to 255.6 points in December from 263.5 points in November. The data also suggests a pullback on quarter-on-quarter basis. The index jumped by over 10 percent in the third quarter, compared to the second quarter, while it moved just 0.71 percent up in December compared to September. However, overall, the price index jumped 34.6 percent for the full-year compared to the previous year. It hit 255.6 points in December 2014 against 189.8 points in December 2013.
QCB's real estate index hit the record 263.5 points in 2014 during the month of November. According to the Ministry of Justice data, the total transaction value of real estate prices stood QR3.6bn during the month.
Market insiders told The Peninsula that reports of shelving major projects by the government and private entities will weigh on Qatar's rental markets going forward. "The market is already witnessing a huge supply-demand gap. There are reports of several mega projects being shelved. This might lead to a lower-than-expected growth in Qatar's projected population rate," a market commentator said.
The details related to either shelving or rescheduling of mega projects with a combined value of around $24bn are already on the public domain. A huge contingent of fresh labour force was expected to get involved in these projects. The temporary suspension or shelving of these projects means that there will be lesser inflow of population, at least in short-term, said another market analyst.
Last week, Shell announced that it shelved its $6.5bn joint venture with QP's Al Karaana petrochemical project.
Market Intelligence publication MEED said Qatar's Public Works Authority (Ashghal) has decided to place its estimated $12bn "Sharq Crossing" project on hold. On Tuesday, SICO Investment Bank noted in its latest petrochemical market analysis, Industries Qatar halted its plans to build a $6bn chemical plant in September.
"These projects are expected to fetch large number of extra labour force". "Historically, huge public spending was the main driver of QCB's real estate index. Now the reports of backing out from the projects, though temporary, will certainly reflect on the market performance," he said.
Another market expert Abdullah Al Khater said: "In fact, Qatar was working on the idea of 'prioritising' its project well before the market was hit by oil price crash. Simultaneous execution of multi-billion project has been putting tremendous pressure on construction sector. The decision to focus on FIFA-related projects will certainly have a bearing on the rental market".
LS is a reputed real estate agency focusing on The Pearl Qatar and West Bay residential accommodation. Its Sales and Leasing Manager Dan Strutt, however, preferred to differ: "We have not seen any signs of the rental market slowing down. Prices may start to stabilise over the coming months, mainly because of the promise of increased supply".
Dan said prices have continued to rise on The Pearl Qatar, especially for most Studio, 1 and 2-bedroom units.
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