November 19, 2023

Quarterly Report Qatar Q3 2023: Office Market Overview

Increasing focus on sustainability and retrofitting of older buildings

 

Leasing activity was quiet in the commercial office sector during the summer months, with overall take-up for the year lagging behind 2022.

We expect activity in the short term to be dominated by the public sector, with a number of proposals for Grade A space currently under discussion.

The QFZA, QFC and Invest Qatar have all been taking strides to boost private sector demand and encourage inward investment; however, significant new office demand from the private sector is only likely to become evident in the medium term.

The availability of office accommodation and the relatively slow take-up has resulted in a fall in construction activity in the commercial office sector in 2023. We expect this trend to continue until a significant portion of existing prime office accommodation is absorbed.

Corporations’ responsibility towards climate change and sustainability is increasingly evident in 2023, with international occupiers demanding accommodation that meets minimum sustainability targets. The number of options available to global corporations in Qatar is reducing, as many will not consider occupying older buildings that don’t meet energy efficiency standards.

With little demand for older office space, retrofitting has become a hot topic among some of Qatar’s developers and landlords. We expect GSAS ratings to play an important role in any major office lettings in Qatar in the coming years. Ultimately, it may be the shortage of high-specification energy efficient buildings that drives new office construction, despite the availability of older office space.

The current oversupply of office space in Qatar will continue to be a drag on office rents as we move towards 2024. The supply of purpose-built office accommodation in Qatar has now surpassed 5.3 million sq m., with an estimated 1.3–1.5 million sq m of vacant space available.

Grade A stock is now typically available to lease for between QAR 100 and QAR 120 per sqm per month, exclusive of service charges. Shell and core office space can be leased from QAR 65 per sq m in areas such as Lusail and West Bay, while this type of accommodation is available for QAR 50–60 per sq m per month in some of Doha’s older office districts.

Cushman & Wakefield Quarterly Report Qatar Q3 2023

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