Asking rents of shops outside malls have generally declined across Qatar in Q1 (except in Al Rayyan) after a brief rental spike during Q4 last year, according to our analysis here at hapondo.
The average asking rent of shops in Doha has decreased from QAR 214/sqm in Q4 to QAR 182/sqm in Q1, marginally higher than Q3. In the popular commercial district Al Sadd, the average rent has been falling for two consecutive quarters and stood at QAR 157/sqm in Q1.
Lusail’s average asking rent of available shops contracted by 2% to QAR 195/sqm in the first quarter of the year, while Umm Salal saw a 9% decline from QAR 230/sqm to QAR 209/sqm quarter-on-quarter.
Al Rayyan proved to be the only exception. Its average asking rent has been increasing for two consecutive quarters from QAR 205/sqm in Q3 2023 to QAR 228/sqm in Q1 2024, reflecting renewed confidence for tenant demand in this area.
What is the possible cause of these developments?
“In Q4 last year, we saw the average rents of shops increase in several places in Qatar on the backdrop of two themes. Firstly, landlords were quite optimistic about retail activities due to the upcoming AFC and other events in early 2024. Secondly, we saw our Doha shop listings doubled in number in Q4 and at higher rates – evidence of spaces that were likely rented during the FIFA World Cup and which were either pre-terminated or not renewed a year after,” says Ahmad Al-Khanji, Chief Executive Officer of hapondo.
Ahmad continues: “In Q1, landlords tempered their expectations and therefore we saw adjustments in the average rent of available stock in many places in Qatar.”
The decline in rents is positive news for tenants, says hapondo. Additionally, like the office market, the retail sector outside malls has a considerable amount of listed fitted space, which plays well for businesses that want to save on fit-out costs.
Despite downward pressure on shop rents, the last six months saw notable developments in other parts of Qatar’s retail sector: malls. Velero Mall’s launch late last year added new prime retail space in Lusail. Qatar Tourism also mounted Shop Qatar, a campaign to promote the country as a retail destination. There are also positive signs for real estate demand; Doha Festival City recently announced its 500th lease, making it fully rented.