Growth seen for Qatar real estate market
Doha, May 6, 2010
Qatar’s real estate market is expected to experience growth this year with demand for all types of real estate seen increasing as a result of Qatar’s strong economic environment, a report said.
The report by DTZ, one of the top global real estate advisory firms, see brighter outlook for the country’s real estate sector during 2010.
However, Mark Proudley, associate director at DTZ Qatar and author of the report, advised: “As the real estate market continues to mature, it is vital that real estate developers and investors focus on the fundamental drivers of the market. Preparing and implementing proactive asset management strategies will be the basis for enhancing real estate values.”
The office market
According to the report, total current office stock in Doha is estimated at 3.2 million sq m, of which 50 per cent is considered as Grade A stock. The Diplomatic District, which is regarded as Doha’s new central business district (CBD), accounts for just over 70 per cent of the current Grade A stock. In comparative terms all other locations are considered secondary.
At the end of 2008, there were 46 completed, high-rise commercial office towers within the Diplomatic District providing 680,000 sq m of leasable accommodation. That figure now stands at 1.1 million sq m, equating to a 60 per cent increase in supply over 15 months. There is currently, approximately 158,000 sq m of space being marketed producing a vacancy rate of 14 per cent in comparison with 22 per cent recorded in December 2009 and sub 5 per cent at the end of 2008, the report said.
A further five developments are under construction and scheduled for completion before the end of 2010, creating an additional 192,000 sq m available to lease. These will take total office stock in the Diplomatic District up to 1.3 million sq m if construction works are carried out according to schedule without any major delays.
Whilst continuing to suffer from substantial oversupply, the Qatar office market has benefited from increased occupier confidence in Q1 2010. Over the whole of 2009, DTZ only registered new demand totalling 137,580 sq m which was 50 per cent less than the recorded increase in supply. However, Q1 2010 has recorded registered demand totalling 137,200 sq m, the highest level recorded for a single quarter since Q3 2008.
Rents on prime commercial office properties have stabilised over the quarter but further rental reductions have been witnessed in the secondary markets with occupiers focusing on quality. Prime rates in the Diplomatic District reached QR250 per sq m/month; however it is possible to secure new accommodation from rates as low as QR180 per sq m/month.
The residential market
As with the commercial office market, demand for residential property has also shown signs of improvement since the start of the year; although high levels of availability continue to push rents for prime apartments and compound villas in a downward trend.
Rentals for compound villas have decreased due to oversupply in the market; albeit the average reductions have been less than 10 per cent. In comparative terms, large stand alone, high end villas have performed better, with rates for good quality stock stabilising due to restricted availability. Rentals start at QR23,000 rising up to QR40,000 per month. – TradeArabia News Service