Metro, Lusail Light Rail seen shifting demand dynamics of Qatar's office market.
Skyscrapers stand on the city skyline in Doha. Cushman and Wakefield's research indicates that Qatar's overall purpose-built office supply is in the region of 4.8mn sqm, approximately 45% of which is situated in West Bay and Lusail. Santhosh V. Perumal Qatar's office market is likely to see a shift in demand dynamics, following the opening of the Doha Metro and the upcoming Lusail Light Rail network, which is expected to open this year, according to Cushman and Wakefield, a global commercial real estate services company. "We anticipate buildings with immediate connectivity to the rail network will experience greater tenant demand and are more likely to maintain occupancy rates and increase their rental levels over time," it said in a report. Its research indicates that Qatar's overall purpose-built office supply is in the region of 4.8mn sqm, approximately 45% of which is situated in West Bay and Lusail. "We estimate that in excess of 230,000sqm was completed in the Marina district alone in 2019, which has already increased competition within the market," it said, adding the vacancy rate across the prime office districts has increased to almost 32%. "In 2020, a further 140,000sqm of Grade A accommodation is expected to come online in both Marina District and Energy City in Lusail," the report said. Highlighting that oversupply in the office market has "impacted" rental rates throughout Doha; it said in order to build occupancy, rental levels in Lusail have been pitched at levels similar to secondary districts such as C-Ring Road and Old Salata. "Significant increase in supply, particularly in Lusail, has put downward pressure on rents," the report said. Highlighting that the monthly rents for Lusail office accommodation are now typically between QR80 and QR110 per sqm, depending on the type of fit-out, size, quality of construction, and location, it said, adding rent-free incentives of at least one-month are also available in most buildings. As tenants migrate towards new office developments, older stock in secondary and tertiary locations are now available at monthly rates between QR60 and QR70 per sqm. At the higher end of the market, offices in West Bay are now available for QR110 to QR140 per sqm per month on the basis of 'CAT A' fit-out. Finding that service charges, which are predominantly based on operational expenses, have remained largely unchanged; it said as such, service charges now usually make up a higher proportion of a tenant's occupancy costs -- especially in the higher-quality buildings. Demand for offices through 2019 has mainly been focused on smaller floor-plates of approximately 250 to 350sqm, it said, reasoning that the demand predominantly comes from the professional services and the financial sectors. While demand from government bodies accounted for 39% of the overall area required, this related to a small number of requirements in excess of 20,000sqm. Demand from within the oil and gas sector has reduced since a high of 257,000sqm in 2012. Cushman and Wakefield have dealt with seven office requirements within the hydrocarbon sector in 2019, with an average size of 2,600sqm. "The demand is anticipated to grow from oil and gas sector in 2020," it added.
[c] Gulf Times Newspaper 2020 Provided by SyndiGate Media Inc. ( Syndigate.info ).
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|Publication:||Gulf Times (Doha, Qatar)|
|Date:||Feb 7, 2020|
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