Mohamad Awada
Head of Sales and Leasing
Capstone Property
Despite all the positive trends and the shortage of supply in the residential sector in the last quarter of 2021, the office and retail activity remained low in 2021. Many factors are affecting the low demand, which is leading to a higher vacancy ratio and a drop in the rates for the upcoming years.
The COVID-19 pandemic has led many international occupiers to put their requirements on hold by testing the new “working from home” strategy and downsizing their offices. Market players are re-assessing their corporate strategies leading to a reduction in demand for office spaces.
With the rise of Lusail Marina District as a developed area with competitive rates, parking facilities, food and beverage outlets availability and state-of-the-art infrastructure, the demand is shifting from previous hubs such as C-Ring Road, Al Sadd and West Bay towards Lusail City.
With low demand and increasing supply in office rent space, developers and managing companies have been obliged to offer appealing incentives to attract new lessees. Fitted office spaces in West Bay are currently priced between QAR80 and QAR120 per sqm per month, with some months free secured. The same office category in Lusail is available for QAR65 to QAR120 per sqm per month, reflecting the recent lack of rental activities in the area. Shell-and-core offices are as well, priced between QAR70 and QAR100 per sqm per month in West Bay and Lusail, and in Doha, they can be leased starting at QAR50 per sqm per month.
Given the massive shift in office occupancy towards Lusail, many towers have also been vacated within Doha as they were previously occupied by governmental entities that have now either purchased or rented out towers in Lusail. This adds to the current tough rental market within areas of Doha that were previously considered the hub.
Lusail Fox Hills is another area expected to be completed soon, which will automatically increase office and retail space supply in the middle of a residential area.
With the uplifting of the COVID-19 restrictions and the upcoming FIFA World Cup, new companies are expected to start operations in Qatar, especially those related to the tournament operations, logistics and events. The requirements received were initially for fully fitted offices with a short leasing period, as most of these companies are on a project basis and do not want to increase their investments in terms of fit-outs and assets.
Those requests were mainly faced with rejections from landlords as many of them prefer longer periods and to lease their offices on a shell-and-core basis.
In conclusion, we expect a challenging year for the commercial industry with more supply than demand in the market, leading to a drop in the rates offered. The key factors to succeed in this period for every landlord is to look for the below:
- A specialized property management company that can efficiently manage their property.
- Increasing the level of services offered at the property.
- Maintaining a high level of professionalism when it comes to maintenance and quality of their assets to match the requested rent value.
- Adopting a more flexible pricing strategy matching the market’s supply and demand.
This article was published as part of the seventh edition of Property Finder Qatar’s Trends Report.
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