Rising consumer confidence and spending, alongside greater governmental investment will present opportunities in Qatar’s retail and office sub-sectors in 2016 and 2017, BMI has said in a report.
Infrastructure “improvements” in Qatar will benefit the broader real estate market, the Fitch Group company said.
The office sector benefits from a strong development pipeline, with around 2mn sqm of space expected to enter the market by 2019, and higher levels of demand, on the back of greater government spending.
“Doha will be central for office developments,” it said.
The city is the focus of most tenant interest and will see continued higher levels of demand leading up to the 2022 FIFA World Cup, with a particular appetite for premium grade units from international investors.
On the other hand, Al Khor and Al Wakrah are seeing little interest for higher-grade space, as developers are unwilling to build due to the economic focus on Doha.
The retail sub-sector benefits from demand for premium malls space, from both domestic and international investors. This has seen an influx of supply in the pipeline for Doha to meet rising demand.
Al Khor and Al Wakrah will see a similar trend to the office sector, although the former is seeing interest for premium grade units, which will continue to support high rental rates.
“We have a stable outlook for Qatar’s economy in the medium term, reflecting the countries resilience to the collapse in oil prices over 2015,” BMI said.
The government has announced reforms that should mitigate further damage to the economy. These include reductions in current government spending, which was cut by 9.5% over 2015 and is forecast to fall again in 2016, as slow developing projects are scrapped, subsidies removed and an increase in stamp duty is introduced.
Capital spending will increase slightly as spending on infrastructure developments advance in order to boost business prospects. Projects include ‘free zones’ to benefit logistics and attract foreign investment.
On top of this, the government is looking to offer more development projects to the private sector, which BMI forecasts will channel funding into the most important and strategic investments.
Overall, it sees this as benefiting the commercial real estate market over the medium and long term, as greater investment into the private sector will create opportunities for foreign development.
The commercial real estate market will also continue to benefit from Qatar’s strong macroeconomic fundamentals, including low unemployment and a diversified labour market, which will support business sentiment, BMI said.
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