Quarterly Report Qatar Q3 2023: Retail Market Overview
Reduced demand from retailers leads to increasing rental incentives from landlords
Qatar’s retail real estate sector has experienced a significant increase supply over the past eight years. While this has led to an enhanced retail offering to shoppers, rents have been falling in most retail sectors due to competition within the market to attract retailers.
Cushman & Wakefield’s research indicates that there is more than 1.7 million sq m of leasable floor space in Qatar’s main organised retail malls (excluding supermarket buildings with ancillary units). This is also 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. This supply was boosted earlier this year by West Walk, a mixed-use development of restaurants and retail outlets in Al Waab.
Several retail developments continue to attract healthy footfall and benefit from high occupancy rates; however, many older malls or recently opened projects still struggle to attract footfall, which is impacting rental levels and occupancy. We estimate that overall occupancy rate across Qatar’s retail malls has fallen to approximately 80%.
Rent-free incentives, fit-out contributions, and turnover rent arrangements are all on offer from most developments to entice retailers; however, demand for retail space has fallen in 2023 with many retailers looking to consolidate after expanding their operations in Doha over recent years.
According to Oxford Economics, the total nominal retail sales in Qatar in 2022 was approx. QAR 53.6 bn. This was the highest recorded rate since 2018 – although sales had been impacted by COVID-19 in the intervening period.
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.
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 rents in many secondary malls is often 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.
Retail showrooms are typically available to lease for between QAR 80 and QAR 150 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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