DTZ Quarterly Report Qatar Q1 2018: Retail Market Overview
The total supply of organised retail accommodation in Qatar surpassed 1.39 million sq m following the recent opening of Tawar Mall in Umm Lekhba.
There are currently a total of 21 purpose built retail malls in Doha, excluding local neighbourhood shopping arcades and stand alone hypermarkets.
Between them, Doha Festival City, Mall of Qatar and Villagio Mall account for more than 40% of retail accommodation in purpose built malls, providing a total of 565,000 sq m gross leasable area.
The supply of organised retail accommodation has increased by more than 200% since 2010. While retail supply struggled to meet the demand of the growing population between 2010 and 2015, the completion of more than 600,000 sq m since 2015, coupled with the downturn in consumer confidence has resulted in a changing market dynamic.
A number of prime retail destinations have maintained relatively strong performance in recent months, however reduced spending combined with additional supply, and the impact of the blockade, has been increasing pressure on retailers and creating a downward pressure on rents.
The quantity of new supply has increased competition between new retail destinations to secure premium brands in the past year, with incentives such as rent-free periods, fit-out contributions, and lower headline rents increasingly prevelant.
Outside of the ‘Organised Retail’ sector, the market in Qatar comprises largely of community mini-malls, ‘Al Furjan’ markets, high street showrooms, and traditional souqs. The increasingly challenging market has seen the emergence of turnover rent agreements in some locations, most notably in destinations that concentrate on the F&B sector.
Prime retail units in shopping malls still typically command rents of between QAR250 and QAR350 per sq m per month, however we are increasingly seeing rental reductions being considered for tenants in some of the ‘less-prime’ locations in order to maintain high occupancy rates.
Elsewhere, showroom rents can vary from QAR100 to QAR180 per sq m depending on their location and profile. Rents in Al Furjan markets are typically restricted to QAR6,000 per month for small retail units.
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