Shopping in Qatar: Mall world

With ten new malls opening in Doha over the next few years, one might assume that the Qatari capital is modelling itself on Dubai. Expect to see new brands, new bistros and new businesses all making their way onto a street near you.

Qatar has already overcome most European countries in terms of retail space, but - apparently - it still isn’t enough. In fact, the country currently provides approximately 300 sq m of organised retail accommodation per 1,000 people and most European countries have an average of 200 sq m. But the general perception in Doha is that when it comes to shopping, the best option is still to hop onto a plane and fly to Dubai.

Some argue that at the current pace, Doha will manage to keep its citizens and residents shopping in its malls instead of seeing them taking their cash to the neighboring UAE, which is still regarded as the retail centre of the region. Dubai has the highest ratio of retail space in the world, offering 1,000 sq m per 1,000 people.

Around 30 percent of consumer demand in Dubai comes from tourists, and even if Doha doesn’t seem to be interested in attracting large-scale tourism, this retail boom could result in turning Doha into a true tourist destination in the Middle East.

Even outside the airy malls of Dubai, Abu Dhabi and Doha, it’s clear that the rest of the region is also investing heavily in the retail arena. The annual growth of retail spending in the Middle East and North Africa is expected to increase from 2.4 percent in 2012 to 4.5 percent in 2013, according to the Economist Intelligence Unit (EIU). But Qatar’s plans are far more ambitious than that.

According to real estate broker DTZ’s 2012 report, the total stock of retail accommodation in Qatar is expected to reach 685,000 sq m by the end of 2013. Meanwhile, real estate services firm Asteco recently said that this figure is set to increase to 750,000 sq m by the end of 2015.

All this new retail space, to serve a relatively small population, could result in one major problem: oversupply. The risk of oversupply and the likelihood of this actually occurring depends on how quickly all these malls are going to open, and whether the launches all occur at the same time.

A similar problem in a different industry has occurred in nearby Abu Dhabi, for example. A spate of new five-star hotel openings in 2012 has pulled occupancy levels down to 61 percent, while margins are getting wafer thin. With a further 7,200 hotel rooms opening in the UAE capital by the end of 2015, it looks like being a grim few years for Abu Dhabi-based operators. But will Qatari retailers also feel the pinch?

The retail market in Qatar is right now dominated by the Villaggio and City Centre malls, which account for 50 percent of the total retail supply, but competition is coming to Doha.

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