Villaggio and City Center Doha are two of the country’s main shopping destinations, with average daily footfalls of around 46,000 and 45,000, respectively.
However, competition levels are rising rapidly, with close to 1.27mn square metres of new retail gross leasable area (GLA) set to be completed over the next three years alone, “signalling a clear risk of over-saturation.”
“The emergence of this huge new supply, which equates to around 83% of the current organised retail stock, is expected to drive down rental rates right across the market, although ageing centres are likely to suffer the most as game-changing centres such as Doha Festival City and Mall of Qatar attract customers from existing centres,” said Mat Green, head of Research & Consulting UAE, CBRE Middle East.
In the residential sector, the H1 2016 Qatar MarketView said residential rental rates have started to show more pronounced declines after years of prolonged growth. Over recent months, demand levels have weakened substantially amidst widespread company downsizing and lower levels of recruitment in both the public and private sectors.
So far, declines have been most prevalent within the higher tiers of the residential market, with rental rates falling by over 10% in some cases since the start of the year. However, the market average decline is actually around 5% over the past six months, the report said.
“While rentals are tumbling for some prime units, rates for low to mid-end residences have actually remained relatively steady. This has been driven by the lower levels of new supply in this segment, sustained population growth and deflationary wage pressures, which have forced some employees to seek lower cost accommodation alternatives amidst an uncertain economic environment. This trend is likely to pick up pace in the short term as vacancy rates rise, particularly in freehold locations such as The Pearl-Qatar where there is an active secondary market,” said Green.
Qatar has around 145,000 completed residential units, including those with commercial components. Over the next three years, CBRE expects to see the addition of around 28,000 new residential units, with majority large number of these apartments to be delivered in locations such as The Pearl-Qatar, Lusail City and West Bay.
In the hospitality sector, Qatar has posted the highest drop in revenue per available room (RevPAR) in the GCC region during the sixth months to June 2016, according to data from STR Global. RevPAR fell by around 22% (year-to-date) from QR405 per room/night to QR317/room/night following a double-digit decline in occupancy rates and sustained drops in ADR’s during the period.
“This underlines what has been a very challenging period for the local hospitality market, and reflects the combined negative effects of market seasonality and the recent slump in corporate demand,” Green said.
He added: “With a large pipeline of new hotel keys currently under construction and set for imminent delivery, pressure on hotel owners and operators is set to continue with further downward movement in average daily rates and occupancy rates.
“What has been evident from the recent slump is that the market has an opportunity to establish a wider mix of hospitality demand generators to strengthen the overall market potential.”