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Premium Qatar malls thrive despite online competition

The Villaggio Mall in Doha. Qatar's prime malls are succeeding but others are experiencing growing vacancy rates Alamy via Reuters
The Villaggio Mall in Doha. Qatar's prime malls are succeeding but others are experiencing growing vacancy rates
  • Footfall up at Qatar’s largest malls
  • 20% of units empty in other centres
  • Online shopping increasingly popular

Large high-end malls in Qatar are winning the favour of consumers who still choose to shop in person amid intensifying competition from the internet.

However, other shopping venues are suffering from reduced footfall and growing vacancy rates.

The flagship Doha Festival City announced last month that it is fully leased after clinching its 500th retail client in addition to more than 100 kiosks across its 250,000 sq m space.

Simon Van de Velde, chief asset management officer at the mall’s developer Al-Futtaim Real Estate, said in a statement that the full-occupancy milestone bolsters the company’s push to “diversify” its retail offering.

Doha Festival City has welcomed 16 new stores this year to date, and expects 23 more to join in the remainder of 2024, including Tesla, Disney and Hermes Perfume, Al Futtaim said in a press release.

According to real estate services company Cushman & Wakefield, footfall, sales and rents grew at some of Qatar’s largest malls during the first quarter, largely thanks to increasing visitor numbers from Saudi Arabia and other foreigners that attended the AFC Asian Cup tournament in Doha in January and February.

“Despite the success of some of Qatar’s prime malls, who often enjoy high occupancy, the overall increase in supply in the past five years has led to a number of malls struggling to attract footfall, with vacancy rates growing,” the consultancy noted in a report published this month.

Approximately 20 percent of all retail units within malls remain empty, according to Cushman & Wakefield, although many such units are concentrated in secondary malls or the least desirable locations of prime ones.

Supply has been steadily growing since 2015 and is bound to further increase as the 100,000 sq m Doha Mall, whose anchor tenant Lulu supermarket opened its doors in February, fully launches later this year. 

“Doha Mall is opening at a time where there is limited demand from retailers to expand their operations in Doha,” Johnny Archer, Cushman & Wakefield’s partner and head of research & consulting for Qatar, told AGBI.

“We expect that initial rental incentives will be required to attract tenants, until a strong footfall has been built and established.”

The $289 million Northgate Mall on the other side of the city is also slated to open in the near future, but there is no indication yet of when exactly that will happen, according to Archer.

Along with growing supply and a preference for high-end retail in a country that has one of the highest per-capita incomes in the world, online shopping is grabbing an increasing share of consumers’ money.

According to a PWC survey conducted in Qatar in October 2023, the most recent of its kind, 78 percent of local shoppers planned to make their purchases online in the following six months. That is significantly higher than both the regional and global averages of 66 percent and 50 percent, respectively. 

Two-thirds of respondents said they enjoy buying clothing, books and electronics online, while 41 percent of survey participants said they “frequently” use virtual reality for shopping-related purposes, compared with only 18 percent in the region as a whole, and 11 percent globally, PWC found.

“The new hybrid Qatari consumer will increasingly want to find the product online, use virtual reality and comparative sites to look at it, then visit the physical store to evaluate and touch products in person and conclude the purchase via self-checkout,” Kamal Fayed, Qatar deals lead at PwC Middle East, said.

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