DOHA: Qatar’s real estate market is set to witness an additional office supply of office space of over 720,000 (0.72 million) square metres (sqm) Gross Leasable Area (GLA) in 2018 to the existing stock of 3.89 million sqm, taking the total to 4.61 million sqm by the end of this year.
The additional office supply to the existing stock is likely to put further pressure on the asking rents for office space. Some analysts say that more affordable rents will attract new companies and investors to expand and establish new businesses in Qatar.
The growth in office supply is expected to continue in 2019 adding even more space of about 740,000 (0.74m) sqm, taking the total stock to 5.35 million sqm (GLA) by the end of the year, according to the latest market review by ValuStrat, a leading consulting firm.
Under construction office stock to be completed by 2019 was estimated at 1.36 million sqm GLA. Five office buildings were added this quarter in Fereej Bin Dirham (B Ring Road), Al Mansoura, Old Salata, Al Hilal (C Ring Road) and Rawdhat Al Khail (C Ring Road), comprising 47,500 sq m GLA.
Projected supply for 2018 has been adjusted downward from 960,000 sqm to 720,000 sqm due to delayed deliveries.
With an average occupancy rate of office spaces ranging between 55 and 65 percent, offices in Salwa Road experienced the highest quarterly fall as median monthly asking rents amounted to QR90 per sq m in the area, according to the second quarter 2018 ValuStrat Price Index (VPI), median monthly asking rents for office space in West Bay were QR145 per sqm, followed by QR120 per sqm in C and D Ring Road and QR117 per sqm in Lusail.
Offices along C and D ring experienced an estimated 2 percent q-o-q and 8 percent y-o-y fall in median monthly asking rents. This drop was primarily attributed to falling asking rents along C-Ring Road where a number of new offices were added to current stock, levelling occupancy at 65 percent against 70 percent in Q2, 2017.
In terms of retail space supply, as of Q2 2018, the total supply of organised retail space reached 1.8 million sqm, with 376,000 sqm GLA from four malls, which are expected to complete by the end of this year.
Qatar Development Bank (QDB) launched the second phase of Al Furjan Markets which will feature no less than 300 shops distributed across Al Rayyan, Umm Salal, Al Khor and Al Wakrah expected to be completed by 2019.
Based on GLA and population figures, shopping centre GLA of Qatar is 680 sqm per 1,000 capita, compared to the GCC average of 588 sqm per 1,000 capita.
Events such as Qatar Summer Festival (QSF) and Garangao drove higher consumer spending during the quarter. The median monthly rent for medium line shops (between 100 sqm and 250 sqm) in organised retail space was QR340 per sq m. While median monthly rent for street retail shops in Doha was QR230 per sqm.
In an effort to maintain healthy occupancy, landlords in newer shopping malls introduced incentives by absorbing operational expenses and lowering service charges.
