Q3 2015 Qatar Market Report: Office Market Overview
Office Market Overview
Since 2006, the office market in Qatar has been dominated by the government and hydrocarbon sectors, with the letting of entire office towers to single occupiers common in the West Bay Area.
According to our latest analysis there is currently in the region of 1.7 million sq m of purpose built office space in West Bay, which represents approximately over 40% of the supply of purpose built office accommodation in Doha.
DTZ estimates that in the region of 65% of office space in West Bay is occupied or leased either by government or hydrocarbon related companies, however activity on this front has reduced significantly in the past 12 months. The recent fall in oil prices has resulted in many Qatari institutions revising their budgets, which has had an impact on demand for new offices. The result has been a significant drop in leasing activity from previous years, with no commercial leases in excess of 3,000 sq m agreed in Q3.
The majority of lease transactions in Doha this year have related to smaller office suites of less than 250 sq m. In order to replace the demand that was previously generated by government related activity, a significant increase in private sector activity will be required. Despite a reduced level of new office lettings in 2015, DTZ estimate that there is currently in the region of 130,000 sq m of vacant offices available to rent in West Bay, which represents approximately 8% of total supply. This has resulted in stable rental levels being maintained in the West Bay area.
A further 300,000 sq m of office accommodation is likely to come to the market in West Bay and Lusail within the next 12 months, which will increase supply levels and potentially increase vacancy rates, and is likely to put downward pressure on rental levels. In West Bay, rents can vary from QAR160 per sq m per month to QAR280 per sq m per month depending on the quality of the accommodation and the amount of space leased. Small office units in high quality buildings remain in short supply and still commanded premium rents.
Elsewhere, office rents around C and D Ring Roads, Old Salata, Airport Road, and Al Sadd typically command between QAR120 and QAR180 per sq m per month, relative to the age and the standard of finish for the building.
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