DTZ Quarterly Report Qatar Q1 2019: Office Market Overview
There have been some major new additions to Doha’s office supply in Q1, with the launch of some of Qatar’s largest Grade A office buildings in Lusail’s Marina District. The E18teen, Burj Alfardan and QIG Tower are all now nearing completion and available to lease, adding more than 120,000 sq m to supply in Lusail.
Overall supply in Lusail has now increased to approximately 450,000 sq m, with the total supply of purpose-built office accommodation in Doha estimated to be in excess of 4.5 million sq m. While the development of West Bay as an office district is substantially complete, additional floor space in developments such as QP District, and Al Mana Tower will increase supply in this district to more than 1.85 million sq m by 2020.
DTZ research indicates that additional new supply in Lusail has increased the vacancy rate of Grade A offices to more than 30% in West Bay and Lusail.
Demand for new office accommodation in Doha, both from government bodies and oil and gas companies has reduced significantly since 2015, while most private sector companies have been largely consolidating or downsizing their office requirements since 2016. It is hoped that government initiatives to expand and diversify Qatar’s economy, which has seen a large increase in company registrations, will soon translate into significant new demand for corporate office accommodation.
The increasing vacancy rates in Doha, has seen rents continue to soften going into 2019. Prime offices in West Bay, fitted to CAT A standard, are now available for between QAR 110 and QAR 140 per sq m per month. Discounted rents can be secured on shell and core office space, while prime fitted suites of less than 500 sq m can still command in excess of QAR 160 per sq m per month.
Offices in secondary areas such as Al Sadd, Old Salata and C-Ring Road are often now quoted at monthly rates between QAR 70 and QAR 90 per sq m, depending on size, quality, fit-out and location.
Rent free periods of two to three months for new leases of three to five years respectfully for smaller suites are now commonplace, with fixed annual rental uplifts no longer featuring in most commercial lease terms.
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