Market set to decide housing rents now

Only the commercial properties will be “rent protected” as per the latest law

The new rent law issued on Monday by HH the Emir Sheikh Hamad bin Khalifa al-Thani, while ending a two-year freeze on residential rents, also nullifies the annual caps on hikes, experts told Gulf Times yesterday.

The Law No 2 of 2010 has, however, kept the rent freeze on commercial properties for another year. “Legally the Emiri Decree supersedes the Cabinet Decision No 9 of 2008 as well as the Law No 4 of 2008 (the rental law) which restricted rental increase for both residential and commercial properties,” Al Tamimi & Company-Qatar managing partner Ahmad Anani said.

Decision No 9 pertained to two types of contracts: firstly, no rental increases (residential and commercial) were permitted for contracts in force from January 1, 2005 for two years from February 14, 2008; secondly, a categorical percentage increase for contracts dated before January 1, 2005.

“The more specialised law supersedes the general law. The purpose of “unfreezing” the residential rents is ostensibly to let the market find its balance,” Anani added.

Doha-based lawyer Nizar Kochery explained the latest law meant only the commercial properties were now “rent protected”. “The annual caps for rent increase were 20% (for monthly rents of QR2,000 and less), 15% (QR2,000- QR5,000), 10% (QR5,000-QR10,000) and 5% (QR10,000+). The latest decision takes them away,” Kochery said.

The impact of the freezing of commercial rents will take a while to be gauged, industry sources said yesterday. According to international realty firm Fine & Country Qatar, the continuation of freeze on commercial properties comes at a time when close to 1mn sqm of office space is available on locations such as the C and D Ring Roads as well as the West Bay.

“In some locations, commercial rents have dropped to as low as QR120 per sqm from around QR240 per sqm in the beginning of 2008. Some of the owners are now even offering two free months,” country manager Mounir Bensegueni said.

The decision, according to him, has been taken to encourage hundreds of offices currently operating from villas to move into the new buildings.

“Our understanding is that such offices (out of villas) only have a two-year commercial registration,” Bensegueni said.

Property developers Hala Group Entreprises, however, believes the decision to continue the ban on commercial rent increases will bring more business.

“We, as developers, are not interested in increasing the rent. If a developer has 100 offices lying vacant, he is not interested in raising the rents, rather getting clients,” general manager Ijaz Malik noted.

Commercial tenants, while appreciating the freeze, pointed out that, as with any law, people might find ways to circumvent the legislation.

“Even before the legislation came, our landlord had cautioned us that he would raise the rents if the new law allowed it,” Suhail Mirza, proprietor of a bakery and sweets outlet, said.

The businessman was recently asked by the landlord to vacate the premises or pay QR20,000 a month instead of the current QR5,000.