This is a result of easing inflationary pressures due to the global economic situation and the release of a number of new real estate projects in 2009, alleviating excess demand.
According to the report, Qatar's office market has posted healthy growth in recent years which has been sustained by both existing and new Government institutions and departments to support the country's development.
However, with the substantial increase in new office stock, especially in the Diplomatic District, and reduced demand in response to the current global economic situation, DTZ do not anticipate any rental growth in the prime commercial sector until the end of 2010.
Average prime rental rates for Q1 2009 in the Diplomatic District are recorded at QR250 per square metre per month, excluding service charge.
Office buildings in the Diplomatic District generally command a premium over other locations, as demand preference for Grade A offices in the new CBD remains strong across all business sectors.
The secondary locations of the C and D Ring Roads, Grand Hamad Street and Al Sadd command an average rental rate ranging from QR150 - 180 per square metre per month.
Nick Witty, Qatar's Country Manager and Deputy Managing Director for DTZ's Middle East Operations, commented on the office market by saying:
"As the market continues to grow and mature, greater levels of stock will offer potential occupiers a choice of accommodation and lead to the development of a two-tier office market. High quality, modern offices, designed and built to meet occupier requirements will command a premium over lower quality stock which will lead to increasing levels of vacancy in the secondary stock."
The residential market is expected to continue to experience relatively strong demand over the medium term as the economy remains stable and the country's population continues to grow. As residential supply increases substantially, DTZ envisage a price correction instead of a drastic fall in prices bringing the market towards a more sustainable level.
Apartment and villa rental prices in Doha have stabilised since Q4 2008 without any further sharp price increases as experienced in early 2008. The average rental rates for villas and apartments in Doha's main residential areas did not record any significant decline in Q1 2009.
Rental prices for prime residential areas such as Dafna, Al Wa'ab, West Bay Lagoon and the Diplomatic District continue to command a premium over other residential areas. Apartment and villa rental prices are likely to experience a slight decline between 5% and 10% in 2009 as more residential properties are released to the Doha market.
Residential sales at The Pearl dominate the freehold market. The Pearl is a mixed-use development built on 4 million square metres of reclaimed land off the eastern coast close to West Bay Lagoon. The final project will comprise 16,000 residential units accommodating approximately 40,000 residents.
Apartments, villas and townhouses in the two main phases of Porto Arabia and Viva Bahriya have gradually been launched since 2004. Average apartment sales prices at The Pearl peaked at rates of QR18,000 per square metre in Q2 of 2008.
Witty commented on the residential sales market, "The global economic situation has resulted in lower market confidence among property investors and stricter bank lending requirements discouraging off-plan purchases. As such, there has been very limited transactional evidence since the middle of 2008 to benchmark current pricing. We do not expect prices in Qatar to reduce significantly due to limited speculation activity in the market in comparison to countries like Dubai."
Contributing significantly to Qatar's economy, the industrial sector is expanding various industries for foreign direct investment and improving the business environment for private sector participation. The existing industrial areas are established by the Government with each area focusing on the development of specific industries.
These areas include Ras Laffan Industrial City, Mesaieed Industrial City and located along Salwa Road is Doha's Industrial Area which is designated by the Ministry of Energy and Industry to house small and medium sized businesses. Furthermore, Qatar is planning to establish three additional free trade zones which are commonly known as the Qatar Economic Zones (QEZs).
The future potential for industrial development remains strong and will continue to contribute significantly to Qatar's economic growth. In the medium to long term, upcoming transport projects such as the New Doha International Airport, The Bahrain Friendship Causeway and New Doha Port will create a high level of demand for industrial land in Qatar.
The final sector covered in the report is retail. This sector has grown considerably in recent years and is likely to continue to do so as Qatar aims to attract circa 1.4 million international tourists per annum by 2011 - with a targeted increase in average spend per trip, per visitor.
Most existing malls boast full occupancy with waiting lists of potential tenants. Landmark, City Centre and Villaggio shopping malls command the highest average rental rates ranging from QR180 to QR225 per square metre per month for standard units due to their location and popularity among residents.
Witty summed up the outlook for the retail market by saying, "In the short to medium term, the retail market outlook remains fundamentally sound with demand continuing to outstrip supply and the growing tourism sector giving a boost to the retail market. As a result, vacancy rates are expected to remain low even as retail stock increases and rental growth on new developments which add diversity, exclusivity and depth to the retail market will remain strong."
DTZ is the most established firm of real estate advisers in the Middle East, with its first permanent operations beginning in 1975. Today, DTZ has a presence in six GCC locations (Abu Dhabi, Dubai, Bahrain, Kuwait, Qatar and Saudi Arabia). Each DTZ office provides a full range of real estate services staffed by qualified expatriates and experienced Nationals.