Demand should steer Gulf real estate developers

03 November 2009

If developers assume that tenants will flock to their new projects, they should prepare for disappointment

Dubai will finally open the world’s tallest building, the 818-metre Burj Dubai, on 4 January. The Burj Dubai will dwarf the second-tallest building in the world, Taiwan’s 509-metre Taipei 101. The project has encouraged developers across the Gulf to pursue their own high-rise projects, and Doha is no different in this respect.

Doha plans to build at least three 300-metre-plus towers in the coming years, with one, Qatar National Bank’s new headquarters building, planned to be 510 metres, making it the second-tallest in the world.

Although these projects are still challenging from an engineering perspective, they are not as daunting as they once were. What is more difficult is finding tenants to fill them.

US-based property consultant Colliers International says that supply and demand is almost in equilibrium in the Gulf, which means any new office space coming on to the market will have to be met with new demand.

The problem is that tall towers need a lot of demand. For example, Qatar National Bank’s headquarters will have 138,000 square metres of space to fill.

If the tower, along with the other high-rise projects in Doha, are to be successful, the developers must sign up tenants before construction begins.

If developers assume that tenants will flock to their new projects, they should be prepared for disappointment.

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