DTZ Quarterly Report Qatar Q2 2018: Retail Market Overview
There is currently a total of 21 purpose-built retail malls in Doha (excluding local neighbourhood centres and stand-alone hypermarket developments), which provide almost 1.4 million sq m of gross leasable accommodation. DTZ
The three largest malls in Qatar, Doha Festival City, Mall of Qatar and Villaggio Mall account for more than 40% of retail mall accommodation, providing a total of 565,000 sq m of gross leasable area between them.
Tawar Mall in Umm Lekhba is the most recent mall to open, providing a total of 90,000 sq m of retail accommodation.
The supply of organised retail accommodation has trebled within the past 8 years. The completion of 600,000 sq m of leasable retail area since 2015 has resulted in change in dynamic within the retail sector, with vacancy rates increasing in what was previously an undersupplied sector.
The sharp increase in supply, coupled with the downturn in overall consumer spending has resulted in a downward pressure on rents as landlords look maintain occupancy levels.
While a number of prime retail destinations continue to enjoy full occupancy and attract high footfall, the quantity of new supply has increased competition between retail destinations to secure premium brands. The past 12 months has seen an increase in tenant incentives such as rent-free periods, fit-out contributions, and lower headline rents.
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, most of which experience high occupancy, by offering lower rents and more flexible lease terms than the larger malls.
Demand for F&B outlets remains strong, although operators are increasingly ‘rent-sensitive’. Throughout Q2, DTZ has seen a notable increase in enquiries for retail and F&B accommodation in Lusail, as residential and office occupiers start moving to the Marina District and Fox Hills.
Within the main shopping malls, line-stores of between 100 and 250 sq m usually command monthly rents of between QAR250 and QAR390 per sq m, with discounted rents available for the larger stores. There is evidence that rental reductions are being granted for tenants in some of the ‘less-prime’ locations in order to maintain existing occupancy levels.
Showroom and high street rents usually vary from QAR100 to QAR160 per sq m depending on the location. Rents in Al Furjan markets, which are a government backed initiative, are typically restricted to QAR6,000 per month for small units.
To find a property for lease in Doha, please click here to start your property search.