1/3/5 The Pearl-Qatar 2/4 Lusail 6 Villagio Mall
added that it is in ‘highly positive’ negotiations with Qatar Petroleum over the planned sale of the Barwa Financial District to the world’s largest liquefied natural gas producer. Infrastructure projects under development
include the US$3 billion, 45-kilometre Qatar- Bahrain Causeway and the US$14 billion New Doha International Airport (NDIA). The airport will have an annual handling capacity of 50 million and will create 50,000 jobs when all three phases are complete. Qatar is vying with Abu Dhabi and Dubai to become the Gulf’s transit hub, with all three boosting airport capacity. The first and second phases of NDIA are due to open at the end of 2011 and the airport’s initial capacity will be 25 million passengers. Doha will also benefit from a new sea port – according to a senior project official, quoted back in January, the first phase is due to be operational by November 2014.
COMMERCIAL SUPPLY
Doha’s office stock has seen significant expansion in the last decade due to strong demand from the oil and gas industry as well as government institutions. Most of Doha’s existing Grade A supply is located in West Bay and the new CBD (Diplomatic District). Secondary premises are predominantly located along Grand Hamad Street (Bank Street), Salwa Road, Al Sadd and the C and D-Ring Roads. Upcoming supply includes 20 more towers
in West Bay which are due for completion over the next two years, and the phased delivery of a number of commercial units in the Lusail project.
Yet Cushman & Wakefield points out that upcoming
projects, along with the global slowdown, has ‘swung the office market into over-supply’. The report adds: ‘This [supply], coupled with a marked fall in registered requirements for new space, has brought Doha’s rapid rental hike to an end.’ It states that the Doha office market is strongly tied
to the occupational trend of government offices – along with other publicly-owned and affiliated companies – which tend to lease rather than buy, or custom-build their own premises. The report adds that there is demand for prime space
in the Qatar Financial Centre (QFC), which ‘continues to attract new international companies working in the development of the financial services market in Qatar and global corporations, either relocating from secondary and converted residential premises or new entrants to the market’. Reports suggest that Qatar’s financial sector is expected to expand by 5,200 jobs this year, with a total of 20,100 employees in the financial sector by the end of the year. Cushman & Wakefield states that the Doha office
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market has witnessed the same ‘flight to quality’ trend that has occurred in many markets in the wake of the financial crisis. ‘Companies who were previously deterred by high rental levels or the lack of suitable accommodation are now reconsidering prime locations such as the Diplomatic District. This has consequently led to a drop in demand for office space in secondary and tertiary locations. ‘Additionally, there is increasing flexibility within the market to accommodate demand for smaller space. Discounts are being
offered on prime rentals, where occupiers have larger space requirements and are able to commit to longer lease terms. Once again, occupier trends have been characterised by a general flight to quality.’ Cushman & Wakefield also adds that the drop in demand and take-up has led landlords to introduce a number of concessions:
‘Many landlords, particularly within West Bay, have traditionally held out for single occupiers, however they are now considering leasing parts of their buildings to multiple tenants.’ The financial crisis, coupled with the new supply, has also affected occupancy rates.
The report continues: ‘The capital has traditionally registered some of the GCC’s lowest vacancy rates as they stayed below five percent throughout most of 2008. However, vacancy is now estimated at over 20 percent, with a number of newly completed buildings yet to sign any tenants. ‘The market witnessed an initial flux of tenants exercising lease breaks to take advantage of improved rental terms and upgrade from their current premises. This trend has now witnessed a marked slowdown as occupiers wait in a belief that rental rates will fall further. Prime locations such as West Bay continue to command a premium, with current rents approximately QAR240 (US$66) per square metre, per month, marking a drop of over 35 percent from Doha’s prime rental peak of QAR325 (US$89) per square metre per month. Rental rates in secondary and tertiary locations have witnessed the greatest reduction, with rental rates now ranging from QAR100 to QAR150 (U$27 to US$41) per square metre per month.’ An amendment to the land law has meant that companies operating out of villas in residential districts have until September 2010 to move into office space. In September 2007 a number of firms were allowed to work from residential villas due to a lack of available office space. This law expired in September 2009, but businesses were granted an additional year to find alternative premises.
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Companies who were previously deterred by high rental levels or the lack of suitable accommodation are now reconsidering prime locations such as the Diplomatic District
apr-may 2010
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