Supply and Demand of Office Space in Qatar
Engel & Völkers counts 2012 as a good year for both commercial and residential parts of the real estate market in Qatar. The increase in requests for office spaces and the reasonably stable residential market throughout 2012, also announced the expectation of an even higher demand in 2013. In this article we will look at the commercial real estate market in Qatar.
If we look upon the commercial real estate market, a research done by Engel & Völkers shows that the main requests exist for commercial land in order to build new offices and mixed-use towers. Furthermore, the requests also relate to the plans for new hospitals, shopping malls, logistic centers and other commercial properties.
The demand for office space in Qatar is currently on a satisfactory level. In addition, plans related to the huge projects, especially in the infrastructure sector, will bring more engineering and construction professionals to Doha and they will also require office areas.
Since the announcement of the successful bid for FIFA World Cup 2022 in December 2010, the construction has been going ahead much faster. The number of new commercial office buildings rises continuously. A lot of prime offices with some retail spaces on the ground levels, like within the Jaidah Square or Doha Tower, were recently completed.
Currently, the total office supply in Doha is approximately 3.6 million square meters. In addition, more than 30 new office towers, which are currently under construction, will be offered in the market during 2013 and 2014. The most known are The World Trade Center and Albaker Towers in Westbay as well as the Shoumoukh Towers in Al Sadd.
Many of the office buildings are being offered for rent to only one client or at least on a floor-by-floor basis, while the demand for smaller areas still remains high. Since we have seen that the government, semi-government entities and main oil and gas companies have already taken the huge spaces, we are not sure which other industry will need such a huge space of 10,000sqm upwards. Of course, the banks also have a huge demand, but some of them, like Doha Bank and Qatar International Islamic Bank, build their own towers.
Currently, the rental prices are stable while the rents on Grade-A buildings are even slightly increasing (See the chart below). It is due to the increasing demand for office spaces in the recent months, which mainly comes from the mentioned sectors as well from clients which couldn’t renew their company registration in commercial villas because of the changes of the related laws.
Due to the development of the New Doha International Airport and the Port in Wakra, the demand for office spaces on the C Ring Road, the D Ring Road, and Airport Road has been higher than in Westbay. In addition, Salata seems to be more interesting for companies nowadays since new buildings are being rented for QR 130 per square meter with the potential to go higher in the coming months.
However, the highest rates are still reached in Westbay. We counted the top spaces with QR 225 per square meter. There are also units available in the market with even higher rates, but besides on some penthouse-floors we haven’t seen companies accepting these prices.
Overall, we see that the price ranges are getting higher in all areas and that tenants appreciate a good quality and, especially, good service. In addition to the main points like size, layout and quality, buildings which are known for client-oriented service, immediate solutions for various issues, and high standards of the facility management, keep a high rental rate wherever they are located. Currently, those are the buildings on C Ring Road, Airport Road and in Al Sadd. These buildings are priced at QR 180 or 190 per square meter, which is the same rate you will pay for a space in most of the towers in Westbay.
According to Engel & Völkers, offices priced below QR 100 per sq.m. are still rare, but seem to become more common in areas like the Industrial Area and its close surroundings.
Mirco Alexander Maurer, Managing Director, Engel & Völkers, foresees a very positive development of Qatar’s real estate market. Government investment plans, which are caused by the successful bid for FIFA World Cup 2022 along with Qatar National Vision 2030, will lead to more economic activity and, thus, attract more potential employees to Qatar. In addition, upcoming infrastructural plans like the metro-system, Qatar Bahrain Causeway, railway-network, new deep-water port and the completion of the New Doha International Airport will further contribute to the stabilisation of the country’s real estate market.