Increased vacancies in Qatar’s commercial and residential real estate linked to cuts in government spending in Q1 2016
DTZ Qatar reports on the first quarter of 2016 at Cityscape’s Qatar Market Overview
Doha, Qatar; 26 April 2016: DTZ Qatar released and presented its Q1 2016 Market Report regarding the Qatari real estate market during the Qatar Market Overview, taking place as part of Cityscape Qatar. At the conference, industry experts discussed the challenges, opportunities, and key concerns of the real estate market in an event chaired by DTZ Qatar’s Edd Brookes.
“This year’s Cityscape Market Overview contains key real estate insights, with a panel discussion focusing on sustainability beyond 2022 and the anticipated impact of Qatar’s infrastructure spending. The panel of experts come from diverse sectors in the real estate industry, to provide a comprehensive perspective on leading topics. While the market report provides an objective view, understanding what the challenges are allows businesses within our industry to make strategic decisions that can sustain their competitive advantage, even in a fluctuating market,” commented Edd Brookes, General Manager, DTZ Qatar.
DTZ Qatar’s report reveals a further slowdown in commercial and residential lettings due to cuts in government spending in the first quarter. Most commercial real estate lettings are for small office spaces, which are in demand from the private sector. It is estimated that between 2009 and 2014 as much as 65% of commercial space was accounted for by governmental and semi-governmental entities; however, this demand has reduced significantly in the past 12 months.
Population increase, which continues to be fuelled by growth in the private sector is accounting for demand in low to mid-level residential property, while prime real estate is seeing lengthening voids in some cases.
Commenting on the findings of DTZ’s latest report, Mark Proudley, Associate Director, Consultancy and Research, DTZ, stated:
“While the real estate market remains in flux, the macroeconomic outlook is solid, according to Standard & Poor’s. The credit ratings agency recently confirmed Qatar’s AA rating and stable outlook. However, the waning price of oil continues to threaten the government’s budget. The need to decrease spending is challenged by the requirement to keep pace with developmental requirements ahead of 2022. The current cost of projects underway is QAR 261 billion. This excludes projects in the energy and private sectors.”
With regard to the retail sector, the supply of leasable property in ‘organised’ retail malls is 643,000 sqm, with high occupancy rates across sectors. Meanwhile, the hospitality sector is experiencing a decrease in occupancy rates with 15 new hotels and hotel apartment buildings having been opened in the past year. Currently, supply has reached 20,000 rooms.