Rents stabilising in Qatar are a clear indication of the upbeat mood in the market about medium- to long-term national economic prospects.
In the last few months, many commercial and residential properties have come to the local market and many more are expected in the months ahead.
For investors, a key factor that drives their business strategy is the projected return on investments (ROI). Obviously, return on investments is decided by the demand and supply situation.
With Qatar economy witnessing rapid growth and many infrastructure projects being taken up, national economic prospects look good.
Population growth has been accelerating mainly because expatriates come to work on new infrastructure projects.
This is bound to put pressure on both commercial and residential properties with the result that rents may go up considerably.
Rents are likely to be a major swing factor in forecasts of consumer price inflation for 2013, experts have already warned.
Historically, from 2005 until 2013, Qatar’s inflation averaged 4.05% reaching an all time high of 16.59% in June 2008 and a record deflation of 9.96% in December 2009, a study by Standard Chartered Bank has shown.
According to QNB, overall inflation increased 3.6% year-on-year and 0.4% month-on-month to 2.4% in March this year.
Since the housing component has the largest weighting in the inflation basket (32.2%), escalating rents are sure to drive inflation in Qatar.
Rising inflation will certainly take the sheen off the real GDP growth, which no economy can afford.
In the past, when inflation surged and touched double digits, the government took very strong measures to contain it.
They included putting a ceiling on the annual rental increases and starting new low-cost residential projects. Many nationals and expatriates have then benefited from the pro-active measures taken by the government.