(MENAFN- The Peninsula)
By Satish Kanady
DOHA: Qatar’s real estate market is facing challenges due to the ‘spending priorities’ of public sector and large corporates. Public sector is increasingly staying away from acquiring new office spaces. The corporates and large companies are slowly withdrawing from residential market and prefer to provide housing allowances rather than leasing out accommodations for their employees. The result has been significant drop in leasing activity in prime residential and commercial real estate market.
Enquiries with the market sources reveal that public sector accounts for more than 60 percent of office leasing in West Bay area. Government’s austerity measures have resulted in a lack of new office acquisitions by the public sector in West Bay . There is an increasing trend of public sector companies withdrawing from the residential market as well.
A valuation expert at a leading real estate and business services company told The Peninsula the government bodies and oil and gas companies are slowly withdrawing from the market. No commercial leases in excess of 3000sq m agreed in third quarter of 2015 he said.
There has been a fall in demand for corporate lettings of entire residential blocks and compounds. Companies are increasingly looking to provide housing allowances rather than providing accommodation to their employees. This has resulted in a number of residential apartment blocks remaining vacant as some landlords prefer to secure corporate leases he said.
The real estate market is rife with speculation that another major public sector entity which has a key stake in Qatar’s residential market is weighing the options of withdrawing from the market by providing housing allowances to its employees.
“Over 2015 redundancies in the hydrocarbon and governments sectors together with new building completions have increased vacancy levels in many areas. The increase in vacancy levels has been most evident in the past three months where we have started to see rents in some areas reduce for the first time since 2009” market analysts at DTZ said.
The majority enquiries for office accommodation during October-December 2015 was limited to less than 250 sqm in the west Bay area. The demand from the private sector has also fallen in the past 12 months. In order to maintain current occupancy levels in 2016 there needs to be an increase in activity both from the public and private sectors another market expert said.
According to market analysts there is currently more than 1.6 million sqm of purpose built office space in West Bay which represents approximately over 40 percent of the supply of the supply of purpose built office accommodation in Doha. Despite fall in demand for office accommodation availability levels in West Bay remain relatively low at 8 percent of built stock. DTZ estimates that there is currently an estimated 130000 sqm of vacant offices available to rent in West Bay much of which is available only as ‘single’ let buildings. This has resulted in rents remaining stable.
The Peninsula