Quarterly Report Qatar Q2 2023: Retail Market Overview
Retail rents and occupancy are under pressure despite increases in retail spending.
According to Oxford Economics, the total nominal retail sales in Qatar in 2022 was approx. QAR 53.6 bn, the highest recorded rate since 2018, albeit with sales impacted by COVID-19 in the intervening period. When compared to pre-COVID sales figures, the World Cup did not appear to result in a major boost to annual retail sales.
Retail spending has been projected to increase to more than QAR 57 bn in 2023, supported by increased tourist numbers, economic growth, and a growing number of high-profile international retail outlets in the country. Qatar’s disposable income levels are also among the world’s highest, reflecting US$ 97,096 in December 2022, when adjusted by purchasing power parity.
Despite improving underlying metrics, Qatar’s retail real estate sector remains under pressure due to the significant increase in retail floor space that has been delivered since 2015. Our 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. West Walk, a mixed-use development of restaurants and retail outlets in Al Waab opened its doors in Q2, attracting strong footfall in its early weeks.
Several retail developments continue to attract healthy footfall and benefit from high occupancy rates; however, many older malls or recently opened projects are 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.
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.