Qatar’s retail real estate sector remained stable in the first three months of the year, resulting in an increase in supply, according to a report by commercial real estate agency Cushman and Wakefield.
This static growth is the result of ongoing market expansions across Qatar. Lulu Group International, a major player in the region, opened several stores in Q1 2024.
According to the report, numerous units are “being fitted out”.
At the same time, outlets such as Doha Mall are expected to open to the public in 2024, adding nearly 100,000 square meters of retail floor space to the market and making it the largest mall in South-West Doha.
It said: “The opening of Doha Mall will see Qatar’s supply of organized retail malls increase to more than 1.7 million sqm of leasable floor space.
This supply analysis excludes supermarket buildings with ancillary units.”
However, this supply is supplemented by over 400,000 square meters of leasable space in ‘open-air’ retail/F&B areas such as The Pearl Qatar, Souq Waqif, Al Wakra, Msheireb Downtown, Katara, Doha Port, and Lusail Boulevard.
A few of Qatar’s largest malls have reported improved footfall and sales performance in recent months, owing largely to an increase in visitors from Saudi Arabia and other countries during the AFC Asian Cup tournament held earlier this year.
Cushman and Wakefield reported that, despite rising occupancy rates in Qatar’s cutting-edge malls, the overall increase in supply over the last five years has made it difficult to attract footfall, with vacancy rates rising.
However, analysts estimate that approximately 20% of retail units within organized malls are currently vacant.
Many of these vacant spaces can be found in secondary malls or on the upper floors of larger malls.
Meanwhile, demand for prime retail units and F&B opportunities remains strong, with tenants looking for six-month contracts to complete internal fit-outs.
The increasing supply of new retail space has had an impact on retail rents in recent years, but rents in busier malls have stabilized and are showing signs of recovery.
The average rental rates for standard line units of nearly 120 to 250 sq m in Doha’s prime malls range between QR220 and QR280 per sq m per month, while small retail stores across the country range between QR300 and QR400 per sq m per month. As a two-tiered market emerges, some malls with declining footfall frequently achieve less than QR200 per square meter per month for line units.
Aside from these organized retail malls, many Qatar-based outlets rent between QR80 and QR150 per square meter per month. Restaurants and cafés in some of the country’s most popular outdoor areas typically generate rental incomes ranging from QR130 to QR180 per square meter per month.
The report concludes that small outlets in secondary locations in Qatar have seen an increase due to a “sustainable rent” that ranges from QR5,000 to QR10,000 per month, depending on unit size.