Rent rates in Qatar is likely to slow down …

Rent increase in Qatar is likely to slow down over the next six months, QNB said citing a drop in land prices in the country since July 2013.
“Drop in land prices is a leading indicator for rental inflation in the months ahead,” QNB said in its latest monthly economic monitor.
There is already evidence of this as annual rent inflation has slowed to 5.6% in November from 6.7% last year.
Data on land transactions published by the Ministry of Justice show the cost of land fell in the country in the second half of 2013.
“The fundamental driver for real estate prices is the cost of land. If land prices rise, the price for villas, apartments and other real estate prices are likely to go up,” QNB said.
“Slowing rental price is keeping overall headline inflation in check,” the report said.
The slowdown in rental inflation (up 5.6% year-on-year, its slowest pace in seven months) helped keep overall CPI down at 2.8% year-on-year in November.
Food, beverage and tobacco prices (13% of the overall inflation weight) rose 2.6% year-on-year, but were down 0.7% month-on-month.
“We expect a further pickup in population growth to drive consumer demand, leading to a rise in non-rent inflation. Indeed, planned heavy investments in major projects in 2014 are likely to accelerate economic growth, which could lead to supply bottlenecks pushing up prices. The strong inflows of expatriates needed to work on projects are likely to increase demand pressures throughout the domestic economy,” QNB said.
The number of people living in Qatar grew by 11.4% year-on-year in December 2013 to reach 2.05mn. Population growth in recent months has been driven by the large ramp-up in infrastructure spending in preparation for the 2022 FIFA World Cup.
QNB forecasts an average growth in the resident population of 10.9% for 2013.
“The larger population will lead to higher economic growth by boosting aggregate demand investment in housing and services,” the report said.
QNB expects Qatar’s real GDP growth to pick up further this year to 6.8% as the implementation of large infrastructure projects accelerates and the fast growing population boosts domestic demand.
Large infrastructure projects such as the Lusail real estate development, New Doha Port, Hamad International Airport and the Doha Metro rail project will support growth going forward.
“Thus the key driver of growth will therefore continue to be the non-hydrocarbon sector, which is expected to grow from 42% of the nominal GDP in 2012 to more than 50% by 2015,” QNB said.
The monthly monitor also shows Qatar’s international reserves stood at $39.6bn in November, 2013, up $6.4bn since end-2012.
“As a result, the import cover stood at 16.2 months, well above the IMF-recommended level of three months for pegged exchange rates,” the report said.
Qatar’s international reserves have been “steadily rising” over the years on large current account surpluses. Source: Gulf Times

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