(MENAFN- Gulf Times) Commercial rents in Qatar are expected to grow annually at 5% to 7% at least until 2017, according to Al Asmakh Real Estate Development Company (Aredc).
"A large amount of new office buildings are under construction, which would be available by the beginning of 2017, until then expectations on annual rental rate growth is 5% to 7%," said a report by the valuation and research department of Aredc.
The office sector has passed its bottom-most in the real estate cycle; the rental rates are getting stronger but new supply might affect occupancies in specific locations, it said.
Highlighting that the commercial development within Qatar is a "strategic" move for an investor, the report said the size of a project and ability of its owner to lease out at prevailing market rental rates are the keys to success.
The commercial segment within Qatar is predominantly in and around Doha city, around 58% of business establishments have their offices within Doha and 28% corporates are placed within Al Rayyan municipality, it said.
Nearly 91% of businesses are owned by private entities whereas; government and government-managed establishments have a share of 7.5%, it added.
Offices are mainly located in four zones: West Bay is preferred by large scale local, international corporates and government entities. Grand Hamad Street and Doha downtown are favoured by banks, financial institutions and small-to-mid scale companies. C/D Ring roads are chosen by mid-to-high scale corporates. Al Sadd is selected by all groups of corporates, according to Aredc.
West Bay has the highest amount of Grade A offices with an average size of 600sq m. Grand Hamad Street and Doha downtown comprise Grade B and C offices with an average size of 100sq m. C/D Ring roads accommodate a mix of Grade A and B offices with an average size of 310sq m. Al Sadd comprises Grade B and C offices with an average size of 300sq m. The overall rents in upper-floor offices are on premium in West Bay due to quality of the buildings with monthly rents ranging between QR200 to QR250 per sq m. Owing to the location advantage, the average monthly rents in Doha downtown areas is QR150 per sq m.
C-Ring Road connects old Doha to West Bay, with average monthly rents at QR170 per sq m. Al Sadd is superior among other locations such as D-Ring Road, Salwa Road and Airport, the monthly rental rates in these areas are in the range of QR120 to QR165 per sq m.
Barwa Commercial Avenue is the latest entrant into office and retail segment, offering various sizes of offices for a range of business activities, fetching a monthly rent of QR80 to QR110 per sq m, it said.
Owing to higher occupancy rate and decent monthly rentals, Aredc said the average gross annual yield in offices in West Bay is 6.5%, C/D-Ring Road is about 7%, Al Sadd is around 7.5% and Salwa Road is 6%.
"The highest yield could be found in well-maintained buildings with specific combination of mid-to-large size offices with an available option of long term contract," it said.
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