Qataris spend up to $5,000 a month on luxury goods, making them the region’s biggest buyers of high-end products
Qatar has clear appeal for foreign retailers. The tiny Gulf emirate has posted explosive, double-digit economic growth for the past six years, prompting a surge in consumer spending. Doha’s gross domestic product (GDP) per capita was $106,394 in 2012, according to the Washington-based IMF, among the highest in the world. GDP growth is expected to decelerate in 2013, but Qatar is still on track to post enviable figures. The impact of a planned $60bn infrastructure drive, ahead of Qatar’s hosting of football’s Fifa World Cup in 2022, will be a further trigger for economic growth.
While the country may lag behind other GCC states in terms of total retail and mall space, its high-spending shoppers are a potential gold mine for retailers. Qataris spend up to $5,000 a month on luxury goods, according to American Express Middle East, making them the region’s biggest buyers of high-end merchandise. Omanis, by comparison, spend less than $250.
Generous state handouts have helped to fuel spending. In 2011, the country’s emir ordered a 60 per cent rise in basic salaries and social benefits for public sector workers, a QR10bn ($2.75bn) increase.
This trend has been reflected in purchases by the Qatari government itself. The Gulf emirate wholly owns London-based luxury retailer Harrods through its sovereign wealth fund QIA. The fund also holds stakes in high-end French brand LVMH. In July, an unnamed Qatari royal was reported to have bought the Italian fashion label Valentino in a e700m ($906m) deal.
Demand for retail space in Doha has been strong, with malls enjoying high occupancy rates. Monthly in-line store rents in the city’s major malls averaged QR180-225 at the close of 2011, according to property consultancy CBRE. Older properties may be challenged as more leasable space comes online, the result of planned mall completions, but supply is unlikely to outpace demand in the near term.
Some $3.2bn-worth of retail schemes are planned, being commissioned or under way in the emirate, according to regional projects tracker MEED Projects, paving the way for more foreign brands to enter the market. Among the largest is Doha Festival City, a retail and entertainment complex by the UAE’s Al-Futtaim Group, which is slated for completion in 2015. The mall will include 260,000 square metres of retail space, and will feature Qatar’s first branch of Ikea as an anchor tenant. In July, Al-Futtaim raised a QR3.7bn ($1.6bn) loan for the mall’s construction, in a deal with Qatar Islamic Bank.
Lagoona Mall, a 128,000 sq m complex in Doha’s upmarket West Bay area, opened in February.
Doha’s tourism plans will also be a boon for retailers. The government expects Qatar’s population to grow 2.1 per cent a year to 2016, reaching 1.9 million. The tourism authority in 2011 said it planned to spend between $20bn and $25bn on tourism infrastructure over the next 11 years.