Qatar’S GDP to accelerate as country prepares to host FIFA World Cup in 2022

November 3, 2021

Qatar’s GDP data shows the economy shrank by 2.5 percent y/y in Q1 2021, which reflects the impact of the COVID-19 restrictions on economic activity. This stemmed from a slower pick-up in the non-oil sector, which fell by 2.8 percent compared to 2.0 percent in the oil sector.
The lifting of COVID-19 restrictions over recent months has seen economic activity increase, with q/q growth in Q2 at 1.5 percent.
Overall, Oxford Economics forecast GDP growth of 2.5 percent for the year as domestic activity continues to gain traction, with the economy expected to surpass its pre-pandemic level by yearend.
GDP growth is expected to accelerate to 3.7 percent in 2022 buoyed by ongoing investment in infrastructure ahead of the FIFA World Cup and by increasing gas prices.
With more than 80 percent of the population fully vaccinated, COVID-19 cases in Qatar have edged down to below 100 per day from a peak of 1,900 per day in June 2020. This has led to optimism that the non-oil sector can grow to up to 4.9 percent next year.
August’s PMI of 58.2 was the second highest on record, and points to business conditions rapidly improving amid strengthening output and new business.
Prices in August fell 0.3 percent m/m leading to annual inflation slowing from 3.1 percent to 3.0 percent. Lower food prices were behind the decline while housing costs only saw a moderate change.
Qatar has based its 2021 budget on a conservative assumption of a $ 40bp oil price, well below the $ 69pb for the year forecasted by Oxford Economics in September. Spending restraint and increasing gas prices indicate that Qatar’s budget deficit will return to a surplus this year. The rapid escalation of global gas prices in Q3 and uncertainty about how long these prices will be sustained is likely to further result in revisions to economic forecasts in Q4.
Qatar will enter a new phase in the lifting of lockdown restrictions on October 3rd, which is expected to further boost economic activity. Despite the progress made by Qatar on this front, global uncertainty regarding new variants and new waves of the virus mean that full economic recovery may take some time.
Office Market Overview
Cushman and Wakefield estimate that overall leasable office supply in Qatar is in the region of 5 million sqm, of which 49 percent is in West Bay, Lusail and Msheireb – Doha’s prime commercial districts.
The majority of new office construction has taken place in Lusail, where existing supply has now surpassed 600,000 sqm. Supply in the Marina District and Energy City will soon be supplemented by development in Lusail Towers and Commercial Boulevard, which are expected to provide more than 500,000 sq m of new office space.
While leasing activity has remained low throughout the summer months, Cushman and Wakefield have represented a number of corporate occupiers who expect to take occupation of new office space in West Bay and Lusail in the coming months. While many international occupiers put office requirements on hold throughout the COVID-19 pandemic, there are signs that companies are now looking to secure additional space to meet their future requirements.
New demand is increasingly shifting to Lusail’s Marina District, where newer, high-specification buildings are available at attractive rents. The new district also offers greater car parking availability, and infrastructure provisions.
Msheireb Downtown’s designation by Qatar Free Zone Authority as a ‘Free Zone’ is likely to see demand from international occupiers increase for this development. Existing occupiers include Google and also Wolf Group, a 3D Printing and Digitalisation hub, who acquired space in the Design District in Q3.
Cushman and Wakefield estimate that approximately 20 – 25 percent of supply in West Bay and Lusail is now vacant and available to lease. This figure is likely to increase as upcoming new supply is greater than the anticipated demand. Any increase in the vacancy rate is likely to result in rents remaining flat or falling further in the coming year.
Prime office rents in West Bay now range from QR100 to QR130 per sqm per month exclusive of service charges. Office spaces leased as ‘shell and core’ can be secured for less than QR90 per sq m per month.
Office suites in Lusail usually command rents of between QR80 and QR120 per sqm per month; however, we expect rents to match those in West Bay soon as occupancy rates increase in the area.
Office rents in secondary districts such as Old Salata and Al Sadd range from QR60 to QR80 per sqm per month, with rent-free incentives also available to attract new tenants.


finance & economy

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