Doha: As COVID-19 related restrictions continued to ease gradually throughout the second quarter of the year, there has been an encouraging return to pre-lockdown footfall levels in most retail malls in Qatar, according to Cushman & Wakefield Qatar (CWQ) in its Q2 Real Estate Market Review.
While social distancing measures and reduced capacity remain a consideration, retailers in Qatar generally feel that the most challenging period is behind them, and a brighter outlook is emerging.
New demand for retail accommodation remains subdued, as retailers retain a cautious approach with COVID-19 in mind. However, recent evidence suggests that several retailers are looking to secure space in some of Doha’s prime retail developments where strong footfall can be guaranteed.
The recent reconfiguration of City Centre Mall saw the delivery of a number of ‘big-box’ units, which have enjoyed strong demand from tenants. Research from Cushman & Wakefield shows that there is still reasonable demand for retail units of between 1,000sqm and 2,000sqm in prime retail locations. The supply of retail mall accommodation in Qatar is now in excess of 1.5 million sqm.
The delivery of new supply has been delayed over the past 18 months as COVID-19 has impacted on proposed opening dates. La Galleria at Msheireb remains the only new development to open its doors in 2021. However, Place Vendome and Doha Mall are anticipated to open before year-end. Rents for ‘in-line’ retail stores in Doha’s main organised malls typically range from QR200 to QR320 per sqm per month. Lower rents are available to anchor stores and larger outlets, with retailers in a strong position to negotiate favourable terms for large units.
Many retailers were offered temporary discounts or rent holidays over the past year to cushion the impact of the COVID-19 pandemic. Most of these incentives have dissipated in recent months as footfall levels recover and trading returns to pre-COVID levels.
Qatar’s domestic recovery is expected to gain traction in the second half of the year as the number of vaccinated residents increases. Cushman & Wakefield Qatar expects to see a significant increase in real estate activity as travel restrictions ease and the 2022 FIFA World Cup approaches. According to the Planning and Statistics Authority (PSA), year-to-date real estate transactions have increased by 82 percent by the end of May.
Residential house/apartment sales increased by 180 percent in April and May compared to the corresponding months in 2020. Qatar’s residential investment sales have been boosted by the expansion of Freehold Zones, which allow ownership of property by foreign nationals. Properties in Al Daayen represent approximately one-quarter of all residential sales, indicating the popularity of new freehold sales projects in Fox Hills, Al Erkyah City, and Yasmeen City in Lusail.
Occupancy rates climb in prime locations as residents capitalise on reduced rents. Demand for apartments in locations like The Pearl-Qatar, West Bay, and Lusail’s Marina District surged in recent months as residents take advantage of the more affordable rental levels in these areas. In addition, the report shows that residential tenants increasingly prioritise their rental budget, with reduced spending on international travel and holidays, primarily due to COVID-19.
Occupancy levels in The Pearl-Qatar and West Bay Lagoon are currently at their highest point in more than four years. This has led to some evidence of rents increasing for certain apartment types, although most rents remain stable, as they have been over the past year.
The vast majority of rental activity has been generated by those re-locating within the country. However, there have been increasing signs of new residents moving to Qatar, largely on projects that are either directly or indirectly related to the FIFA World Cup in 2022.
The importance of high-quality building finishes and amenities has become more apparent in recent months in areas such as Bin Mahmoud, Al Sadd, and Msheireb. High specification buildings that offer tenants swimming pools and gyms have retained high occupancy rates, while older buildings generally see vacancy rates increase, and rental levels falling.
Semi-furnished, two-bedroom apartments in Porto Arabia typically command monthly rents of between QR10,000 and QR12,000. In districts such as Bin Mahmoud, rental values can vary significantly depending on the quality of the buildings.
New buildings can command rents between QR9,000 and QR11,000 per month for two-bedroom apartments, while similarly sized apartments in older buildings may struggle to generate monthly rents of QR6,000.
Demand from tenants has shifted towards fully furnished units or serviced apartments over the past year. This is especially the case for new residents on short-term contracts – including those moving to Qatar on World Cup-related projects, added CWQ.
