DTZ Quarterly Report Qatar Q4 2017: Retail Market Overview
Total organised retail supply in Qatar is now approaching 1.3 million sq m in the country’s twenty principal shopping malls. Organised retail supply in Qatar has almost doubled since 2014, which has transformed an undersupplied market to once which suffers from oversupply within three years.
The most recent addition to the retail market is B Square Mall in Al Thumama, which combines retail units with extensive entertainment and leisure provisions (accounting 40% of the total leasable area).
Additional supply is expected to arrive in 2018 with the official opening of Tawar Mall, and the completion of Northgate Mall, Katara, and Doha Souq among others.
The sharp increase in retail supply has had a significant impact on performance levels throughout Qatar, most notably for newly developed malls who are competing for tenants in an increasingly challenging market.
Footfall and retail spending has reduced, partially as a result of the blockade, but also due to the general economic downturn following the collapse of oil prices. While some of the prime retail destinations have maintained relatively strong performance in recent months, tenants in many retail malls are finding prevailing conditions increasingly difficult. In DTZ’s opinion, this is likely to manifest itself in lower rents and increasing vacancy in the less successful malls once current lease terms expire.
While some new malls have managed to secure high occupancy, a strong tenant mix and high profile international brands, it is becoming increasingly challenging to secure retail operators due to the growing supply pipeline. This has led to an increase in tenant incentives such as rent-free periods, fit-out contributions, and lower headline rents.
Elsewhere the retail market in Qatar comprises largely of community mini-malls, ‘Al Furjan’ markets, high street showrooms and strip malls, and traditional souqs. The challenging retail conditions has seen the emergence of turnover rent agreements in some locations, as landlords look to attract and retain tenants.
In-line stores in prime retail malls still typically command rents of between QAR250 and QAR350 per sq m per month, however as leases expire over the coming years, we expect to see a greater difference in headline rents emerge between prime malls, and secondary malls.
Elsewhere, high-street rents can vary from QAR100 to QAR200 per sq m depending on many factors, however we expect the recent trend of turnover rents to continue, especially for new developments.
For more insight and further information on Qatar’s residential market, please click the link below to download the full report.
To find a property for lease in Doha, please click here to start your property search.