Rental levels in Qatar continued to rise strongly during 2015 despite the backdrop of on-going economic uncertainty and a sustained period of low oil pricing, according to consultants CBRE.
It said in its H2 2015 Qatar MarketView report that residential rental levels increased by approximately 7 percent year-on-year although a slowdown in growth was witnessed towards the end of last year.
“Albeit, this was down from the 14 percent annual growth achieved during the same period in 2014. Rental rate growth during the second half of the year was around 5 percent, although growth in the final quarter was measured at just 1 percent,” said Mat Green, head of Research & Consulting UAE, CBRE Middle East.
“There has been increasing evidence of tenant relocations and downsizing, with some occupiers moving into smaller units or choosing more affordable accommodation in less prominent areas of the city,” added Green.
From a total housing stock of roughly 180,000 units during 2010, Doha’s total housing stock has grown to reach in excess of 226,500 units at the end of 2015, translating into a circa 5 percent annual growth rate, CBRE said.
The report said that a significant majority (80 percent) of future supply will cater to upper mid–high income segments, with estimated rental levels in excess of QR7,500/month, meaning a minimum household monthly income of around QR25,000/month would be required.
When looking at Qatar’s office market, the CBRE report showed that the West Bay/Diplomatic area remains the primary choice for the majority of international and local office occupiers wishing to set up operations in the country.
In addition to comprising roughly 60 percent of the total office stock, proximity to quality residential, retail, hospitality and entertainment facilities make the wider West Bay area more appealing to tenants, CBRE said.
“In terms of the future office supply pipeline, over 32 percent of all office space set to be completed over the next five years will be completed in the Lusail area, versus around 29 percent in West Bay,” said Green.
Prime rentals for Grade A office space remained steady during the second half of the year, he added.
A significant portion of all Grade A office supply in the West Bay area is occupied by the public sector and oil and gas related companies – two areas facing an increasingly uncertain outlook amidst challenging economic conditions.
“With current market conditions in mind, landlords are also becoming more flexible and realistic in their leasing approach, with more acceptance towards accommodating demand for smaller office space, rather than only accepting the rental of whole floors, or whole buildings to Government related entities,” added Green.
According to the CBRE report, in June 2015 the government forecast Qatar’s economy would grow by around 7.3 percent during 2015, down from an earlier estimate of 7.8 percent.
However, in December GDP growth forecasts were cut again, with an estimate of just 3.7 percent for 2015, with a further reduced output expected in 2016 and 2017.
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