Residential rental prices have witnessed relative stability in recent months, especially the recovery of the sector in late August and the beginning of September, coinciding with the beginning of the academic year, with companies recording an increase in registered contracts at the end of the third quarter of the current year. Cushman & Wakefield stated in its report for the third quarter of 2024 that occupancy rates in most areas of the Pearl Island and the Marina District in Lusail remain high, especially in high-quality buildings. The strong demand for apartments in prime locations is due to residents relocating to other locations within Qatar and a significant return to fair market value following a significant rise in rents two years ago during the World Cup.
The report indicated that there is a rise in vacancy rates, which is clearly visible in locations such as Fox Hills and Al Arkiya in Lusail City, where more new units are being delivered, which enhances the supply in the real estate market.
The report also showed that the increasing supply of apartments in the large planned complexes south of Doha and in the Al Wakra and Al Wukair areas, including Our Town and Gardens of the South, has led to pressure on occupancy rates. Luxury residential rents are likely to remain stable in the short term, while we could see downward pressure on rents and further rental incentives in many other locations over the coming months.
Regarding occupancy rates in villa complexes in Doha, the report confirmed that they are still high, as some development projects that are easily accessible from the lively West Bay area are now full and subject to waiting lists of potential new tenants. Cushman and Wakefield expects rents to remain generally stable until the end of this year, with some projects expected to witness growth in rental rates in the coming months.
Conversely, office space in Qatar witnessed a rise in demand with occupancy rates rising in key areas during the third quarter of 2024, with the market achieving its highest level since 2015 in areas such as West Bay following a series of government or government-related lease agreements this year.
According to Cushman & Wakefield, market experts estimate that approximately 130,000 square meters of total leasable office space has been leased or reserved in 2024 so far, with it mainly divided between the Msheireb Downtown Doha and West Bay areas.
The report stated that recent activity in office demand indicates that there is a limited number of availability in the Msheireb Downtown Doha area, while available office space in the West Bay area is expected to decrease to about 160,000 square metres, i.e. less than 10 percent of the total. Offered.
Experts and researchers in the real estate sector expected that the available space in the Marina area in Lusail for office space is expected to reach approximately 130,000 square meters.
Although occupancy rates in prime areas are on the rise, offices in other lesser locations are seeing higher vacancy rates, with many buildings experiencing “long vacancy.”
The report highlighted the demand for prime locations in Doha and Lusail and the lack of new demand from the private sector, leading to a widening gap in rental rates and values between first-class offices and lower-quality buildings.
Cushman and Wakefield said in its report: “Office rents have declined significantly across Doha over the past decade; However, with occupancy increasing throughout 2024, we expect rents to increase in some key buildings for the first time since 2015.”
She also stressed that “despite some signs of upward pressure on prime office rents in recent months, rents remain generally competitive across Doha, with space available to rent for between QAR 100 per square meter and QAR 140 per square meter per month in the Gulf.” Western and Lusail, while structural and basic offices are available for rent for less than QAR 100 per square meter per month.
On the other hand, office space in other areas leased in a “shell and foundation” form can be secured for between 50 and 60 Qatari riyals per square meter per month, analysts said, reflecting the high vacancy rate and low demand.
The report also said that international companies prioritize sustainability and energy-efficient buildings when leasing, while few buildings outside major new office areas meet their requirements.
The report suggested that as the availability of required space in prime locations decreases, owners are motivated to upgrade and modernize older buildings to meet the requirements of these international corporate occupiers.
