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Freebies galore as landlords prefer occupancy over rent

Rahul Preeth
Landlords in Qatar prioritised occupancy over rent last year as they increasingly offered incentives such as rent-free periods, and in some cases capital contributions for fit-outs, according to a real estate research report.
“Following two years of falling rents, the past six months have seen rents stabilise to some degree. However, rental incentives such as rent-free periods and rents that are inclusive of utility bills are being offered as incentives to attract tenants in an increasingly competitive market,” real estate service firm DTZ has said.
The incentives coupled with oversupply in the market have made premium apartments more affordable in Qatar as tenants started trading up their mid-range homes for premium ones, the report noted. The fall in residential rents has slowed in recent months, it said, adding that the increasing affordability of premium apartments has increased demand for units in West Bay and The Pearl Qatar.
The DTZ report also found increased leasing activity for prime apartments in recent months.
“This activity is largely generated by residents looking to relocate within Qatar and ‘trade-up’ to take advantage of more attractive lease terms,” it added.
According to DTZ, good quality mid-range apartments will see “the greatest demand” in the rental accommodation market.
The demand will be driven by the growing non-oil and oil sector professionals, who will begin to replace a significant number of blue-collar workers as several infrastructure projects get completed prior to the 2022 FIFA World Cup.
The report said the overall residential sales activity increased by 11 percent between 2017 and 2018, as purchasers took advantage of a fall in values.
In the investment market, it said the apartments in The Pearl Qatar are currently selling for prices between QR12,500 and QR15,000 per sq m with the highest prices typically being achieved in Viva Bahriya.
In its overview of office space availability in Qatar, the report said the country would see a 40 percent jump in the estimated supply between 2018 and 2022, from 4.3 million square metres to 6 million square metres.
“Overall supply of Grade A office accommodation in West Bay and Lusail has now topped 2 million sq m, while overall supply of office accommodation in Doha is in excess of 4 million sq m.”
There have been a few lease agreements of prominence in the fourth quarter of 2018 in the prime office market, DTZ said.
Most activity has revolved around start-ups and SMEs. This demand is primarily focused on flexible serviced accommodation, or small inexpensive units in secondary locations, rather than the larger corporate office suites on offer in West Bay, the report said.