Quarterly Report Qatar Q2 2020: Retail Market Overview – Cushman & Wakefield Qatar

Press Releases

July 22, 2020

Quarterly Report Qatar Q2 2020: Retail Market Overview

Some landlords continue extending rent relief to their tenants as retail outlets start to re-open

The COVID-19 pandemic had an immediate and severe impact on the retail real estate sector in Qatar in Q2. At the beginning of the quarter, most retail outlets were closed, with only supermarkets and pharmacies allowed to operate. By May, currency exchanges had also been allowed to re-open due to the critical role they play in allowing foreign workers to send cash remittances home.

The phased re-opening of the retail sector started on June 15th. The initial phase of re-opening was restricted to non-F&B units above 300 sq m, which were permitted to operate on weekdays. Food and beverage operators re-opened for take-away only. The second phase of re-opening, beginning on July 1st, permits the re-opening of other retail outlets, excluding leisure and entertainment operators, while restaurants throughout Qatar will re-open at a reduced capacity and with social distancing measures in place.

The third phase of re-opening, to start on August 1st, will see a return to full operation hours in malls, while gyms and pools will re-open at reduced capacity. The fourth phase, scheduled to start by September, will allow for ‘gatherings’ and the opening of entertainment areas such as cinemas and indoor recreation zones.

Unfortunately, the enforced closure throughout Q2 is expected to take its toll throughout the sector, with some retail and F&B operations not expected to re-open. The overall average occupancy rate in Qatar’s retail malls was approximately 83% before the COVID-19 lockdown; however, we expect this to fall in the coming months with the inevitable closure of some retail operations. The full impact on occupancy will become clear once the entertainment and leisure tenants re-open under the final phase of re-opening.

The impact on retailers has seen unprecedented relief measures granted to tenants, often through government support schemes. We expect landlords will continue to work with tenants in the coming months to help them remain open and maintain occupancy rates throughout Qatar’s malls.

Rental relief will have reduced the net-effective retail rents for 2020. Whether headline rents are to be maintained into 2021 remains to be seen. Turnover rent may become more prevalent in situations where landlords and tenants work together to recover from the pandemic.

Several retail malls had been scheduled to open this year; however, it now appears unlikely there will be any significant increase in retail supply before 2021. In total, there is currently approximately 1.4 million sq meters of organised retail supply in Qatar.

Cushman & Wakefield Quarterly Report Qatar Q2 2020

 

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