Qatar’s total office supply in the first six months of 2016 has reached about 5.3mn square metres gross leasable area (GLA), and assuming minimal construction delays, it is expected to reach in excess of 7.0mn sq m GLA by the end of 2018, according to a new report.
Global real estate consultancy firm CBRE, in its ‘H1 2016 Qatar MarketView’, said although Doha’s central locations will see the majority of the upcoming office stock, Lusail City will account for roughly 30% of the total new office space set to be delivered over the next five years. 
“However, there is still significant construction and infrastructure works required across the masterplan before the development reaches critical mass and starts to function as a viable alternative to more established markets such as West Bay.
“With a very significant development pipeline, we expect to see a sustained period of rental deflation for both prime and secondary office spaces, with occupancy rates likely to see significant erosion as the demand from the government and related entities weakens further in the coming quarters, and as excess space is returned to the market,” the report said.
Looking at the country’s office market, the H1 Qatar MarketView has found that landlords are now facing “stiffer competition” to secure new tenancies amidst weakening demand fundamentals and a surplus of available office supply. 
“Landlords,” it also said, “are becoming more flexible with their leasing and payment terms, as they seek to maintain occupation of their buildings.”
Over the past six months, the report said the number of new office requirements and overall take-up levels have declined notably, subsequently creating deflationary rental pressures across the market as vacancy rates have started to rise. 
Mat Green, head of Research & Consulting UAE, CBRE Middle East, said: “Ultimately, the weak performance of the hydrocarbon sector and the knock-on impact on oil and gas and government related occupiers has led to an anaemic performance across the market, with overall commercial activities declining, reflecting the subdued business environment.”
This, according to the report, has resulted in declines in the average prime rental rate, which has fallen 2% quarter-on-quarter and 4% year-on-year to QR230 per sq m/month.