Apartment rents fell by almost four per cent in Qatar in the second quarter, a lower decline than in the first quarter, in a sign its residential rental market is stabilising, a report said on Tuesday.

But continued oversupply in the office sector will further pressure office rents, as more space is handed over in the second half of 2010, UAE-based real estate services firm Asteco said.

'Overall, the downturn in the rental market has provided prospective tenants with more choice of accommodation while landlords are becoming more flexible with their rents and in some cases offer incentives such as rent free periods,' the report said, referring to the residential market.

Apartment rents in the Gulf state fell 11 per cent in the first quarter, it said.

On the sales side, transactions remained flat in the second quarter, which could indicate the market is bottoming out, but relaxing mortgage requirements would go a long way towards helping market recover, Asteco associate director Jed Wolfe said in the report.

'Major banks in Qatar have started to promote retail mortgage products aimed at Qataris and expatriates looking to buy property at The Pearl-Qatar,' he said.

'Although the restrictions on mortgages remain stringent, there are signs that banks are becoming more flexible with their lending requirements,' Wolfe added.

Industry experts have said Qatar is learning lessons from Dubai's flawed speculative building model, which imploded during the global financial crisis and saw residential prices plunge some 60 per cent from their 2008 peak.-Reuters