Commercial rent in Qatar is expected to grow annually at five to 7 per cent 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,” said a report by AREDC. The office sector has passed its bottom-most in the real estate cycle, with rental rates getting stronger but new supply might affect occupancy 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 per cent of business establishments have their offices within Doha and 28 per cent of corporate offices are in Al Rayyan municipality, the report said.
Nearly 91 per cent of businesses are owned by private entities, whereas government and government-managed establishments have a share of 7.5 per cent, it added. Offices are mainly located in four zones: West Bay is preferred by large scale local and international corporate and government entities. Grand Hamad Street and Doha’s downtown are favored 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 600sqm. Grand Hamad Street and downtown Doha 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 310sqm.
Al Sadd comprises Grade B and C offices with an average size of 300sqm. The overall rents in upper-floor offices are on premium in West Bay due to the quality of the buildings, with monthly rents ranging between QR200 to QR250 per sqm. Owing to the location advantage, the average monthly rent in downtown Doha areas is QR150 per sqm. C-Ring Road connects old Doha to West Bay, with average monthly rent at QR170 per sqm. 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 sqm. Barwa Commercial Avenue is the latest entrant into the office and retail segment, offering various sizes of offices for a range of business activities, fetching a monthly rent of QR80 to QR110 per sqm. Owing to higher occupancy rate and decent monthly rentals, AREDC said the average gross annual yield in offices in West Bay is 6.5 per cent, C/D-Ring Road is about 7 per cent, Al Sadd is around 7.5 per cent and Salwa Road is 6 per cent. The highest yield could be found in well-maintained buildings with specific a combination of mid-to-large size offices with an available option of long-term contracts.
