Doha: Around 4,500 new hotel keys are expected to be delivered to the market throughout 2022, with most targeting opening dates in the third quarter, according to a report by Cushman and Wakefield.
This new supply, combined with existing hotel supply, and serviced apartment supply is expected to deliver approximately 37,000 keys, or 45,000 rooms for the World Cup, added the report.
New supply has been relatively limited this year to date, with Le Royal Meridian being the most notable addition to the market in Q2. Qatar will benefit from a unique opportunity to promote and expand tourism by hosting the FIFA World Cup in 2022.
“We expect tourism from global markets to grow significantly in the next five years, while the return of the Saudi market will also boost tourist arrivals. Strong growth in tourism numbers will be required to support occupancy rates and revenues as supply continues to grow,” said the report. "Overall occupancy rates fell for the year to April fell from 61 percent to 44 percent and remained on par with May 2021 at 58 percent; however, the statistics for 2021 excluded a substantial number of hotels that were utilized as quarantine facilities throughout the year," it added.
Throughout the COVID-19 period it is estimated that 35 percent of demand was generated by quarantine requirements. As the months progress, this demand is being replaced by traditional business and leisure tourism, which is building ahead of the FIFA World Cup in November and December, said the report.
“Overall, average daily rates increased marginally in May from QR496 to QR507; however, the 5 star sector recorded a fall from QR813 to QR686. The most recent publication of hotel statistics by NTC (2021 Annual Report) showed that Qatar’s hotel room supply reached 29,386 by year-end, which reflected a 6 percent compound annual growth rate since 2015. By 2026, the overall supply of hotel keys is expected to reach 50,000,” noted the report.
The office market in Qatar has been relatively subdued in recent months, with most leasing activity involving small suites of less than 200 sqm. Having fallen by more than 50 percent between 2015 and 2021, office rents have largely plateaued with the highest rents in the market being sought in West Bay and Msheireb Downtown.
There has been very limited demand for shell-and-core office space over the past three years, and this type of accommodation is available throughout Doha with rent free incentives to subsidise tenant fit-out costs. As rents have become more affordable, demand for offices is increasingly for Grade A accommodation, most notably in Lusail.
According to the report, many lesser-quality vacant office buildings in central Doha’s traditional office areas are struggling to find tenants and are commonly facing extended vacancy periods. Cushman and Wakefield estimate that the supply of purpose-built office accommodation in Qatar has now reached approximately 5.3 million sq m. The Al Dafna/West Bay district has the largest concentration of supply with approx. 1.8 million sqm of gross leasable area in more than 70 buildings.
