x Abu Dhabi, UAEWednesday 17 January 2018

Stock of Doha commercial property growing despite downturn

Qatar's skyline has sprouted some of the most unique buildings in the Gulf over the last few years, but the number of homes and offices have outpaced demand. This has led to the government taking out mass leases on buildings and other remaining vacant.

Once a sleepy fishing village on the Gulf, Doha has seen its skyline transformed by a new business district with dozens of office towers in the past three years.

As with Dubai and Abu Dhabi, these buildings have been designed by world-renowned architects to make a name for the small country.

The 45-storey Doha 9 tower is encased in intricate mashrabiya latticework, while the 52-storey Tornado Tower narrows and then flares to create a striking shape.

But after the regional property downturn, demand for homes and offices has fallen far behind the burgeoning supply, analysts say.

Many of the new high-rises in West Bay - Doha's business district just across the water from its historic centre - are being leased by the government to keep the vacancy rate low.

Still, among the 46 towers completed in West Bay, the vacancy rate is about 20 per cent, according to the property consultancy DTZ. Five more buildings are scheduled to be completed by the end of the year, putting total office space at 1.3 million square metres.

Government ministries have leased out three towers and have "been a key driver in the maintaining of vacancy rates over the first half of the year despite increased supply", according to DTZ.

Prices and rental rates have steadily declined since 2008.

One advantage for businesses setting up in Qatar, however, is that they can be licensed and regulated by the Qatar Financial Centre no matter where they rent office space.

The Dubai International Financial Centre requires that companies be inside its geographic boundaries to be under its jurisdiction.

The close relationship between the government and property developers has led to some unique situations for Qatar.

Barwa Financial District, the developer of a group of nine buildings at a cost of 12 billion rials (Dh12.1bn), is in talks to sell the entire project to Qatar Petroleum, informed sources say.

But Talal Jondi, the chief executive of the company, which is a subsidiary of the developer Barwa, declined to say with which entity the company was negotiating over the buildings.