Quarterly Report Qatar Q1 2023: Office Market Overview
Financial sector companies start committing to Lusail relocations
Following a COVID-19-related downturn in office activity in 2020 and 2021, office leasing transactions increased significantly in 2022; however, leasing activity has been relatively subdued in the first quarter of 2023.
Office activity in 2022 was driven by the government sector and the oil and gas sector. Most activity over the past 12 months has occurred in Lusail. QIA, QNB and Qatar Central Bank will all take up the occupation of Lusail Towers on their completion. In February, the QFC and Qatari Diar announced that the former has acquired more than 6,000 sq m of office space in Lusail Boulevard, joining Qatar Chamber, which is due to relocate to the same street shortly. These upcoming office relocations could potentially see the Lusail downtown area become Qatar’s defacto financial district in the coming years.
The buoyant oil and gas sector has spurred expansion and relocation activity in the past year. As a result, three office deals over 3,000 sq m have been confirmed in West Bay and The Pearl Qatar.
Msheireb Downtown Doha is also gaining recognition as a commercial destination. Msheireb Properties has secured several commercial office lettings in the first quarter of 2023 with international companies from the oil & gas and financial services sectors. There are also several other transactions in the pipeline, which are expected to complete during Q2 2023.
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 sq m of gross leasable area, while the expanding supply of office accommodation in Lusail has surpassed 800,000 sq m.
Despite an increasing office supply, there currently needs to be more options available for companies looking for premium quality fitted space. Most available office space in Doha is either of basic quality or is available on a shell and core basis. While increasingly attractive lease terms are available for shell-and core space, demand is weak due to the requirements for tenants to undertake costly internal fit-outs.
Grade A stock is now typically available to lease for between QAR 100 and QAR 120 per sqm per month, exclusive of service charges. Office spaces leased as ‘shell and core’ can be secured for QAR 55 – 60 per sq m per month in some of Doha’s main office districts.
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