DTZ Quarterly Report Qatar Q3 2018: Office Market Overview
The office leasing market remained subdued in Q3. The majority of recent demand has been generated by companies relocating within Doha, the most notable being BeIN Sports’ move to Al Asmakh Tower on Majlis Al Taawon Street. Outside of West Bay, QNB became the first company to move into Msheireb, having secured more than 2,500 sq m in Doha’s newest prime office location.
West Bay remains Doha’s principal commercial district, comprising in the region of 30% of all purpose-built commercial office accommodation in Doha. Total office supply in West Bay currently stands at approximately 1.7 million sq m.
QP District in West Bay will, on completion, increase supply by more than 200,000 sq m, however most of the new supply in the current pipeline will be delivered in the Marina District of Lusail in the next few years.
While new demand from larger corporate occupiers remains weak, the fall in office rents has generated activity within Doha as tenants strive to secure more attractive lease terms. There has been a significant increase in demand for small business units or serviced office suites in Qatar in 2018. This demand has largely been generated by companies based in the region, who now require a full-time presence in Doha; however, this has not yet translated into a significant absorption of available office accommodation in West Bay or other prime areas.
West Bay typically commands rental levels of between QAR130 and QAR150 per sq m per month on a floor-by-floor basis, although rents in excess of QAR200 per sq m per month can be achieved for smaller fully fitted suites.
Offices in secondary locations are now available at monthly rents of between QAR70 and QAR100 per sq m, depending on size, quality, fit-out and location.
Current office rents have reflected a fall of 20-25% since the height of the market in 2015.
The current oversupply has also resulted in more flexibility among landlords in order to attract and retain tenants. Rent free periods of between 2 and 3 months are now commonplace for new leases, while rents on lease renewals increasingly reflect current market levels rather than the inflated rents that had been agreed between 2013 and 2015.
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