Tarik Al Toubassi is about to move the company he manages out of a villa on the outskirts of Qatar’s capital, Doha, and into new offices downtown that command three times the rent. It’s either that or close down.
The government is forcing almost all Qatari businesses based in residential areas to move into commercial districts over the next two years after a state-backed construction boom helped turn an office shortage into a glut.
“This issue has cost me lots of losses,” said Al Toubassi, administrative manager of Amana Steel Buildings Contracting Co. “I employed four of the staff working full time for three months to find a new office.”
A dearth of commercial space five to six years ago prompted company owners to move into houses and villas, where rents were lower and room was plentiful. A building push driven by rising values and support from the government of Sheikh Hamad bin Khalifa Al-Thani delivered new office properties to the market just as the financial crisis caused investment to slump in the second half of 2008, saddling the sheikhdom with vacant space.
The government helped speed up office construction by giving out land to individuals and companies on the condition they started building within five years, said Mark Proudly, associate director at property adviser DTZ Research. At the same time, rising rents and a growing foreigner population encouraged developers to start work.
Vacancies Rise
Vacancy rates tripled since 2008 in West Bay, the waterfront district that’s home to most of Doha’s newest hotels and office blocks, and now range from 15 percent to 20 percent, according to DTZ. A further 192,000 square meters (2.06 million square feet) of office space will be added to the area’s existing 1.1 million square meters this year, he said.
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