Johnny Archer, Director of Consulting and Research at DTZ Qatar.
The expansion of Qatar’s freehold zones from three to 10 since the implementation of Law No. 16 of 2018 in March, will further boost the country’s real estate investment market. The implementation of the new law will facilitate a more mature investment market, which will evolve over time, leading real estate service business company DTZ Qatar said.
Presenting its latest market review in Doha recently, DTZ Qatar noted the government’s recent move will encourage non-Qatari investors to acquire real estate in the prime office districts of West Bay and Lusail’s Marina District. Going forward, this may result in the sale of small office units and office floors to investors and owner occupiers through strata titles, where previously office buildings were typically held by a single owner, said Johnny Archer, Director of Consulting & Research at DTZ Qatar.
The establishment of the Free Zone Authority, which is aimed at increasing new company registrations in Qatar, is also expected to result in increased demand for offices from the private sector.
To date, the issue of oversupply in Qatar’s real estate market remains to be a concern. However, the government’s focus on economic diversification by developing the private sector, could be a potential solution to address the over supply in the real estate market.
Talking to The Peninsula on the sidelines of the event, Archer said: “The free zones will help develop the private sector and diversify the economy. Qatar has been a very government-led economy, and the aim now is to expand the private sector. Bringing in foreign companies, and trying to create that demand to take up the offices and apartments being built. The Free Zones Authority is a very positive step to generate and create that demand for real estate”.
Archer added that DTZ has also recorded an increase in enquiries for offices in the second quarter of 2019, particularly from companies operating in IT and Technology sectors. There are also indications that companies in Oil & Gas are preparing for growth in anticipation of new hydrocarbon projects.
Overall, DTZ estimates that the current supply of purpose built office accommodation in Doha now stands at 4.7 million sqm.
The addition of over 120,000 sqm of new Grade A office supply in Lusail in 2019 has increased the vacancy rate of Grade A offices to almost 30 percent across West Bay and Marina District.
The increasing vacancy rates in Doha have seen rents continue to decrease. CAT A standard offices in West Bay are now available for between QR110 and QR140 per sqm per month. Offices in areas such as Al Saad, Old Salata and C-Ring Road are often now offered at monthly rates between QR70 and QR100 per sqm, depending on size, quality, fit-out and location.
As with the office sector, the potential market for residential sales has also been expanded. Non-Qatari investors now have the opportunity to purchase apartments in Lusail on a freehold title, where previously only Usufruct title (99 years) was available in this area.
The DTZ report also highlighted that residential rents have largely stabilised following three years of decline. The increasing affordability of apartments in Qatar has seen an increase in demand for apartments in prime locations such as The Pearl Qatar and West Bay, while residential towers in Lusail have also recently come to the market.
