Rents in Qatar continued to fall in the first quarter of 2010, according to a new report published on Wednesday by Asteco.

Apartment rental rates at Lagoon Plaza and Al Sadd experienced the greatest declines, up to 11 percent,  while four and five-bedroom villas in Al Waab, and five-bedroom villas in Al Khraytiyat were also hit, added Asteco’s report on the Qatar residential and commercial property market for Q1 2010.

Asteco said that rents were likely to continue to dip in Q2 before they stabilise.

The study noted that there were, however, a number of residential locations and asset classes where the decrease in rental levels appeared to have stabilised.

Al Muntazah witnessed only a 1.5 percent decrease in the last three months, while the areas of Bin Mahmoud and Westbay Lagoon saw no further declines, the report added.

“Generally, studio and one-bedroom apartments across the market witnessed minimal sale price movements. There have been no noticeable price changes in residential unit sales for both the primary and secondary sales market on The Pearl Qatar," it said.

Property sales prices for both the primary and secondary residential markets remained relatively flat in the last quarter, added Asteco.

“Banks have become more flexible than they were in the previous quarter, with loan-to-value ratios increasing from 70 percent last year to 80-85 percent this quarter. Islamic mortgages are also expected to grow with the increasing number of ready properties coming to the market.”

The office market continued to record decreases in rental rates, the report said.

Jed Wolfe, associate director, regional - Saudi Arabia, Qatar, Bahrain – Asteco, said: “We are witnessing a ‘flight to quality’.  Properties that are professionally managed, well maintained and in good locations continue to attract strong demand. Landlords will need to be vigilant as to the type of property they want to lease as more options become available in the market."

Looking at offices, the Asteco report said there was an estimated 3.2 million square metres of office space in Qatar, 50 percent of which is in Doha’s premier office location – the Diplomatic District.

“Due to the fact that a large amount of office space is coming to the market, particularly in the Diplomatic District, it is likely that office rental rates will decrease further," Asteco said.

"However, an increase in infrastructure projects, along with major commercial and industrial projects, is set to commence in the next 12 months which will increase demand from both local and international companies and help to facilitate the stabilisation of office rents.