Office rents set to soar even further as firms search for cheaper alternatives to Dubai, report says.
Qatar's office rents surged about 20% in the year to June, partly because businesses moved to the country in search of a cheaper alternative to Dubai, property firm CB Richard Ellis said.
Office occupancy rates in Doha, Qatar's capital, reached 98% in the first half and rents are expected to jump a further 10% this year as the country's economic boom draws more businesses, the firm said.
"Office space in the capital was in high demand due to the expansion and interest from international companies looking for better priced alternatives to Dubai," it said in a report on its Web site on Monday.
Office rents in Dubai, which started the Gulf's real estate boom by allowing foreigners to invest in its property market in 2002, have tripled in since 2005, another property services firm, United Arab Emirates-based Asteco, said yesterday.
Annual office rents for Doha's West Bay business area were more than $700 per square metre, according Richard Ellis' data. The report did not give a comparative figure for Dubai.
In a separate report on Monday, property consultancy Colliers International put the cost of office space in the Dubai International Financial Centre at around $1,000 per square metre a year. It estimated a square metre in the Qatar's West Bay would cost $70 a month.
Qatar, which has the world's third largest reserves of natural gas, is ploughing record revenues from energy exports to develop infrastructure, tourism and financial services.
"The workforce influx has inflated demand for all types of residential real estate in the country," Richard Ellis said, estimating housing costs in Qatar had jumped as much as 30% in the year to June and more than doubled since 2005.
A law passed last year, allowing investors from outside Qatar and its five Gulf Arab neighbours to lease property for 99 years, has also fired demand, it said.
Rent for a four-bed room villa surged to $53,000 a year at the end of June from $25,000 in 2005, according to Richard Ellis.
"Rents are expected to remain on high node until new supply enters the market to feed rising demand," it said.
Colliers said the average monthly rent of a 2 bedroom apartment in Doha had risen from $1,100 in 2005 to $2,800 in 2007.
Qatar's central bank has blamed rising rents for surging inflation, which hit 12.8% at the end of the second quarter.
Dubai has capped increases in residential rents at 7% a year to help contain inflation and to retain its allure for expatriate workers and foreign businesses.
Colliers forecast on Monday that Dubai rents could fall in the next two years as more apartments and offices flood the market.