If you own an apartment in Doha and want to start generating cash, will you rent it out fully furnished or leave it bare for tenants?
This is a common question among residential owners whose apartments have been handed over with just the standard finishes, such as flooring, painted walls, electrical, and plumbing. On one side, a complete residential fit-out will cost you furniture, fixtures, and installation and design services. On the other, there is the concern of whether or not there are many takers of unfurnished rental units.
Our recent publication, Qatar’s Property Report Q3 2023, cited convenience as a key driver of rental demand for apartments in Qatar. 76% of apartments listed on hapondo during this period were under the furnished category, while 20% were semi-furnished.
Buyers acquire apartments to either live nearer the city or rent their properties to tenants who want to be close to places of work. This explains why West Bay, The Pearl, Lusail, and key downtown areas are among the leading locations for apartment searches in hapondo. In Qatar, where the expatriate population is significant, leasing is a vibrant market.
How much then should you price your fully furnished unit, and would that premium be enough to cover your cost of furnishing?
Our analysis reveals that in The Pearl, the difference between a semi-furnished and furnished apartment ranges from 5% to 15% per square meter of rent, depending on the apartment type. A semi-furnished 3-bedroom will rent for QR 69.5/sqm per month, but when furnished, the lease rate becomes QR 79.7/sqm per month – a 14.7% difference.
This means that if you are leasing out your semi-furnished unit at the median rent of QR 15,000/month, you can hypothetically increase your price to QR 17,205 per month with complete furnishing, according to Q3 market prices. The difference scales up to QR 26,460 for an entire 1-year contract. How many sofas can you buy with that extra amount?
The bigger the unit and the more bedrooms there are, the more significant the price difference. The premium for a furnished studio apartment is 5.4%; 1-bedroom, 7.2%; and 2-bedroom, 9.6%, according to hapondo’s Q3 analysis. (Note that this finding is limited to The Pearl, and the difference may vary across locations in Qatar and residential categories, such as villas.)
And why would lessees not pay more? Unlike the villa leasing market where families may want more personalization, much of the traditional market for apartments is composed of expatriate workers who may not be as motivated to buy premium furniture during the duration of their employment contracts. A few more hundreds of riyals of monthly rent may not be worth the headache.
So powerful is convenience as a demand driver of apartments that hotels now are competing against traditional apartments. The hotel’s selling proposition is simple: service and amenities you cannot find in typical apartments. Approximately 14% of apartments for rent in Q3 were owned or operated by hotels. The gap in rent between hotel apartments and traditional ones is narrowing in areas such as Najma and Al Mansoura, where competition is tight.
Download our Q3 report on: https://hapondo.qa/blog/q3-2023-qatar-property-report/
The post Owner’s Guide: The Premium of Furnished Over Semi-Furnished Apartments in Doha appeared first on hapondo blog.