Quarterly Report Qatar Q1 2023: Retail Market Overview
Retail rents continue to fall as new supply puts pressure on occupancy levels
Cushman and Wakefield’s research shows that Qatar’s organised retail malls provide more than 1.7 million sq m of leasable floor space (excluding supermarket buildings with ancillary units). This is supplemented by more than 400,000 sq m of leasable space in ‘outdoor’ retail/F&B destinations, including The Pearl, Souq Waqif, Souq Al Wakra, Msheireb Downtown, Katara, Doha Port, And Lusail Boulevard.
The most recently opened super-regional mall in Qatar, Place Vendome, which opened in April 2022, has seen occupancy increase steadily over recent months. While several projects continue to attract the interest of retail tenants, the increase in supply over the past decade has put pressure on the sector, with many older malls or recently opened projects struggling to build and maintain high occupancy rates. Despite some prime developments enjoying full occupancy, the overall vacancy rate across Qatar’s main retail malls has fallen below 80%.
Generous rent-free incentives, fit-out contributions, and turnover rent arrangements remain available to retailers in many developments looking to increase their occupancy rates. Demand for F&B units remains relatively healthy; however, a significant amount of this demand is coming from start-ups or operators who don’t have a track record of trading in Qatar.
The increasing supply of new retail space has impacted retail rents over the past five years. This often manifests in generous rent-free incentives or fit-out contributions rather than reductions in headline rents in prime locations; however, rental levels in secondary developments have fallen considerably over the past three years.
Headline rents for line units in Doha’s prime malls remain between QAR 200 and QAR 250 per sq m per month, exclusive of service charges. Line unit rental in many secondary malls is usually below QAR 200 per sq m per month. Anchor units and entertainment provisions in malls typically benefit from lower rents of between QAR 60 and QAR 150 per sq m per month, depending on the size and use category.
Outside of the organised retail malls, retail showrooms are typically available to lease for between QAR 80 and QAR 150 per sq m per month. Restaurants and cafés in some of Qatar’s most popular outdoor destinations typically generate rental incomes between QAR 130 and QAR 180 per sq m per month.
Small convenience retail outlets in secondary locations such as strip-malls are increasingly leased based on a sustainable rent of between QAR 5,000 and QAR 10,000 per month, depending on the unit size.
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