‘Government demand drives office market’

Doha: Qatar’s office market witnessed a booming period as leasing activities continued to expand during the second quarter of the year. According to a report released yesterday by Cushman & Wakefield, government demand plays a pivotal role in surging office spaces across the key areas in the country. Analysts at the research entity stated that around 120,000 sq m of gross leasable office space has been up for lease or placed under offer in H1 2024, across prime business localities including Msheireb Downtown Doha and West Bay. The report noted that the most significant transaction during the months from April to June was the lease approved by the government for the World Trade Centre Tower on the Corniche, which was vacated by QatarEnergy two years ago.

The World Trade Centre Tower has approximately 58,000 sq m of Grade A office accommodation. Market experts stress that the available office space in West Bay has dropped to nearly 160,000 sq m, reducing the vacancy rate in the district to less than 10 percent.

In Msheireb Downtown Doha, the availability of vacancy rate declined by 5 percent. In the meantime, significant leasing activities have been witnessed across the districts in Lusail. Researchers highlight that the prime office district has now lowered to less than 15 percent, which contrasts with the secondary market in central and south Doha, where the availability of vacancy rates is extremely high. The report said: “A significant amount of the take-up in prime office districts relates to the expansion and relocation of government departments from older buildings across Doha. This is expected to lead to further increasing vacancies in secondary districts at the expiry of existing leases.”

The data also explains that leasing trends have created a “two-tiered” market in the country where demand is aimed at an ever-falling amount of Grade-A space, while the availability for older stock is vacant.

On the other hand, the pipeline supply is dominated by Lusail Towers, with three of the four landmark buildings allocated to Qatar National Bank, Qatar Investment Authority, and Qatar Central Bank.

“It is yet unclear as to how much, if any of this office space will be released to the wider market,” the report added.

As the vacancy rates mount across Grade A locations, upward pressure on leases has commenced re-emerging for the first time since 2015.

While the majority of Grade A office space in areas such as West Bay and Lusail are leased between QR100 and QR130 per sqm per month, exclusive of service charges, a select number of higher-specification buildings will continue to increase their rents for available space

Source: The Peninsula