Oversupply main cause of decline, says research by Doha-based development firm
Office and commercial rents in Qatar are headed downwards and will continue their decline over the next three years due to oversupply, according to a report by Doha-based Al Asmakh Real Estate Development Company.
The report said the emergence of several new ready-to-occupy office and commercial buildings have put rental values under pressure in the segment. With more office space supply in the pipeline until 2019, supply will eventually outstrip demand leading to a continuous decline in office rents.
It added, however, that the demand for small office spaces ranging between 100 and 150sqm was on the rise, especially in the main business centres.
The public sector has been the main consumer of office space in the market for the past two years, the report revealed, often renting out entire building complexes to house government institutions, especially in Doha’s West Bay area. However, the trend has started to decline with an increase in supply of office spaces since the beginning of this year, compared with the same period last year. The report predicted that the supply of new office spaces will start stabilising only from the third quarter of next year.
The monthly lease rates for offices has witnessed a decline since the beginning of 2016 and now range between QR150 ($41.2) and $55 per square metre in the West Bay area, depending on the specifications and services provided by each building, the report said. In secondary commercial areas such as Al Sad area, Airport Road and new Slata, office rental values ranged between $27.5 and $33 per square metre.