Quarterly Report Qatar Q4 2022: Retail Market Overview
A strong increase in World Cup-related visitors results in a boost in retail and F&B spending
Qatar’s newest luxury retail destination opened its doors in Q4, ahead of the FIFA World Cup. Printemps, a Parisian department store, opened its 40,000 sq m department store in the Doha Oasis development, which is also home to the Banyan Tree Hotel, and Quest indoor theme park. MINA District at Doha Port and Giardino Mall on The Pearl-Qatar, anchored by Lulu supermarket, also opened their doors in recent months.
Qatar’s retail sector has seen a significant increase in supply over the past seven years, most notably with the opening of the Mall of Qatar, Doha Festival City, and Place Vendome. Qatar’s organised/indoor retail malls provide in excess of 1.7 million sq m of leasable floor area. This is supplemented by almost 400,000 sq m of ‘outdoor’ destinations including The Pearl, Souq Waqif, Souq Al Wakra, Msheireb, Katara, and Doha Port, many of which have a high concentration of F&B outlets.
The sharp increase in retail real estate supply has put pressure on occupancy rates and rental levels, most notably for new developments. Occupancy rates in Qatar’s retail sector have fallen overall; however, they vary significantly between developments. Prime destinations enjoy high footfall and low vacancy rates. Some of the older malls and new ‘outdoor’ destinations have struggled to secure or maintain high occupancy.
Generous rent-free incentives, fit-out contributions, and turnover rent arrangements have become common features in attracting new retail tenants in Qatar as the supply of accommodation increases. While demand for new F&B units remains strong, this demand is often dominated by start-up cafés and restaurants without a track record of trading in the retail sector.
Headline rents for line units in Doha’s busier malls are typically between QAR 200 and QAR 250 per sq m per month. Rental incentives have been phased out to a large degree in Doha’s busier malls; however, significant discounts and turnover rents are still available in malls with higher vacancies.
Outside of the main organised retail malls, 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 are increasingly leased on the basis of a sustainable rent of between QAR 5,000 and QAR 10,000 per month depending on the size of the unit. Restaurants and cafés in some of Qatar’s most popular outdoor destinations typically generate rental incomes of between QAR 130 and QAR 180 per sq m per month.