Quarterly Report Qatar Q3 2022: Office Market Overview
Boost in leasing activity in recent months due to increased demand from the private sector.
Following a downturn in activity in 2020 and 2021, there has been an increase in office leasing transactions throughout 2022, with a number of office leases agreed in Q3.
There has also been a notable increase in the size of office spaces required by tenants in 2022, with a number of recent lettings in excess of 500 sq m. Recent expansion in the hydrocarbon sector has been behind a recent office acquisition of more than 7,000 sq m and two further lettings in excess of 3,000 sq m.
Earlier in the year, a number of government and semi-government agencies announced their intention to relocate to buildings that are under construction in downtown Lusail. While this will ultimately lead to buildings in other locations being vacated, it highlights an increasing trend in office occupiers moving to Lusail.
Organisations such as Qatar Financial Centre, and increasingly the Qatar Free Zone Authority have been driving demand for offices in the private sector.
We understand that QFZA-designated office accommodation will soon be available to lease to QFZA companies outside of Ras Bufontas, as office buildings within that Free Zone are reaching capacity. The agreement is also in place for QFZA real estate solutions in Msheireb Downtown. To date, more than 300 companies are registered with QFZA, and further growth is expected to create further demand for office accommodation in Doha.
QFC currently has more than 60 designated buildings across Doha housing the 1,400 QFC registered companies. This number is also expected to grow over the coming years.
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. Cushman & Wakefield estimate that more than 200,000 sq m of office accommodation is currently available to lease in West Bay.
While rental levels have stabilised somewhat over the past year, rents on average remain more than 50% below their 2015 peak. With the office market continuing to feel the impact of a huge expansion in supply over the past decade, we expect the number of new office development projects to reduce in the coming years.
Prime rents for Grade A stock range from QAR 100 to QAR 110 per sqm per month exclusive of service charges. Office spaces leased as ‘shell and core’ can be secured for QAR 60 per sq m per month in some of Doha’s main office districts.