A view of the Lusail City skyline with a pair of colourful towers in the foreground. (Photo: Abdul Basit)
An estimated 500,000 (0.5million) sqm office space will be added in Qatar by the end of 2017 and at least 80% of the expected supply is concentrated in Lusail, said a report by ValuStrat on Qatar's real estate market.
“As of Quarter 1 of 2017, the estimated Gross Leasable Area (GLA) of Qatar’s office supply was 3.6 million sqm and approximately 40% of the office stock is concentrated in West Bay,” ValuStrat report on Q1 of Qatar's real estate market reveals.
It adds: “Msheireb Downtown considered as the new “Financial District”, will house Qatar Financial Center (QFC) and non-QFC center companies in approximately 100 mixed-use buildings. Phase 1 of these offices is expected to be released in Q2 2017.”
“Lusail City is another major development which is planned to accommodate approximately 170,000 employees. An estimated 500,000 sqm is in the pipeline till end of 2017, and at least 80% of the expected supply is concentrated in Lusail.”
It points out that during Q1 2017, Government Services Complex was launched in The Pearl Qatar, which comprised of ten government agencies and Traffic Directorate. Moreover, The Pearl Tower 1 also opened for office space rentals.
On office space demand, the report reveals that the majority of demand for office spaces in the country is fuelled by private companies, followed by government departments and related agencies.
“Since last year, the fall in carbon fuel prices has not only triggered the decline in oil revenues for government owned companies in the hydrocarbon sector, but also had a negative spill over on private companies as government reduced the value and number of new projects they outsourced.”
As per ValuStrat research, many companies in West Bay are relocating to smaller space or to areas with lower rents. “This has translated into falling occupancy rates in the district. Meanwhile, some companies are also subletting part of their offices to create revenue and maintain their established location.”
Regarding office rents, the Report says that as compared to 2016, there was a 15% YoY and 2% QoQ fall in overall median monthly asking rental rates.
“The median monthly asking rent for office space in West Bay was QR160 per sqm followed by QR140 per sqm in Lusail and QR130 per sqm in C & D Ring Roads.”
“West Bay saw the highest monthly asking rents of QAR 250-270 per sqm for office areas of 150-200 sqm. Quarterly median rents remained stable for Lusail and C & D Ring Roads.”
As per ValuStrat research, the average occupancy rate in C Ring Road was approximately 70%, this number was driven by a large number of companies retaining their old lease contracts.
“While in Lusail, stability in rents can be explained by a rise in demand from companies working on projects in the locality and wishing to be based locally. Overall, a downward trend in rents will likely continue at least into the next quarter, unless private & government companies start expanding or a considerable rise in new.”
