Q1 2016 Qatar Market Report: Office Market Overview
Following a sustained period of increasing occupancy rates in the prime office district of West Bay, the past 6 months has witnessed a reversal of this trend. The availability rates had dropped to below 10% by 2014, which was largely the result of government bodies reserving a large proportion of towers that completed construction between 2013 and 2015.
Between 2008 and 2014, an estimated 65% of office lettings in West Bay were to government or hydrocarbon related companies. Recent government budget cuts, due to the prolonged period of low oil prices has resulted in a significant drop in the overall demand for office space since early 2015.
DTZ has also witnessed a trend of ‘downsizing’ in the private sector, as enquiries have increased from professional services companies looking to relocate to smaller or more cost effective premises on the expiry of their existing leases. The majority of enquiries for office accommodation in the private sector relates to requirements of less than 250 sq m, however this demand has also fallen since 2014.
A number of office buildings in West Bay, that were completed between 2013 and 2015 were not released to the market in anticipation of leasing deals to government bodies. As activity in this sector dried up, the available space has now been put on the market, increasing the supply of available accommodation. The total supply of office buildings in West Bay currently stands at approximately 1.63 million sq m, of which approximately 0.24 million sq m is available to rent.
DTZ anticipates that approximately 300,000 sq m of new office accommodation is likely to complete in West Bay within the next 12-18 months, however over more than 200,000 sq m of this is at the QP District, which may not be available to the market.
The increase in availability, and reduced demand has started to impact the quoted rents for offices in Doha. This is likely to be compounded in the next 2-3 years due to the large pipeline of new supply, both in West Bay and Lusail.
Grade A offices in West Bay currently command between QAR 150 and QAR250 per sq m per month depending on the size of units and quality of the building. Typically the higher rents are only achievable for small units in prime buildings. More typically, rents of between QAR150 and QAR180 per sq m are being quoted for larger office floorplates.
Rents in areas such as Old Salata, Al Sadd, Airport Road, and C/D Ring Roads typically command between QAR120 and QAR170 per sq m per month, depending on the age and the standard of finish of the building.
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