August 11, 2022

Quarterly Report Qatar Q2 2022: Office Market Overview

Office rents remain stable after an extended period of decline.

The office market in Qatar has been relatively subdued in recent months, with most leasing activity involving small suites of less than 200 sq m.

Having fallen by more than 50% 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. 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 sq m of gross leasable area in more than 70 buildings.

Qatar Energy’s new headquarters in West Bay has been opening on a phased basis throughout 2022. It comprises more than 200,000 sq m or office space and will house Qatar Energy and affiliated companies. The relocation of Qatar Energy from various locations throughout Doha to the new HQ in West Bay is likely to result in an increase in vacancy rates in secondary locations.

As the office market feels the impact of the significant increase in supply over the past decade, the development of new office projects is likely to slow in the coming years. Projects currently under construction in the Downtown Lusail area will increase supply to more than one million sq m of GLA in the area; however, there are already signs of speculative office developments being put on hold, with alternative land-use options being considered.

Prime rents in West Bay range from QAR 100 to QAR 120 per sqm per month exclusive of service charges. Office spaces leased as ‘shell and core’ can be secured for as little as QAR 60 per sq m per month in some areas of central Doha, where vacancy rates are climbing. Office suites in Lusail typically command rent of between QAR 75 and QAR 100 per sq m per month.

Cushman & Wakefield Quarterly Report Qatar Q2 2022