DOHA: The demand for office space in the Diplomatic District is on an upswing, says a real estate expert and warns that this could push the rentals up.
“High levels of take-up has reduced the vacancy rate in the prime area and increased the potential for rental inflation,” said Mark Proudley (pictured).
Giving an insight into Qatar’s real estate market at a joint ARGUS Software-DTZ seminar here yesterday, Proudley, Associate Director, DTZ, said there is approximately 156,000 sq m of vacant space being marketed to lease in the area.
This means that only 10 percent of space would be left to be rented out. “This is a significant reduction in vacancy rate, which stood at 16 percent at the end of 2012.”
Current office stock in the prime Diplomatic District is estimated at 1.54 million sq m.
Proudley said a further 680,000 sq m leasable area of prime commercial space that is currently under construction, though about 50 percent of that future supply is already committed to various occupiers.
Presenting an overview of Qatar’s Q3 (third quarter) 2013 real estate market, he said that in addition to the Diplomatic District there is new prime commercial stock under construction at Lusail.
One tower is complete and three more towers are in the next stages of construction. These four buildings will together create a further 95,000 sq m of prime commercial accommodation. “DTZ understands that all of this commercial accommodation has been leased to Government related occupiers.”
Citing figures, Proudley said the net take-up of prime office accommodation in the first nine months of 2013 stands at about 262,000 sq m . That is well above the five-year average for this period, which is 101,000sq m.
According to him, rental rates for commercial accommodation have remained comparatively stable since 2011. In the Diplomatic District, rents can vary significantly according the quantum and quality of accommodation. It is possible for large space users seeking in excess of 5,000 sq m to secure secondary accommodation from rental rates as low as QR145 per sqm/month. Rental rates of good quality commercial stock in secondary locations range from QR120-150 per sq m/month. Rates of tertiary office locations, such as office accommodation above retail can be acquired at rates from QR80-100 per sq m/ month.
Taking into account the high levels of take-up recorded in 2013, reduced vacancy rates and limited availability of the stock in the pipeline supply, DTZ forecasts that rental rates will start to increase in 2014. The peninsula
