Interview: Abdul Aziz Mohammed Al Rabban
Given that Qatar’s demography is largely blue-collar workers, is there a big enough consumer base to justify the high-end developments being built?
ABDUL AZIZ MOHAMMED AL RABBAN: I can’t speak on the behalf of the other developers, but we have pursued a diversification strategy for the four properties within our portfolio. For example, Villaggio Mall is positioned as a luxury mall; Landmark is positioned as a middle to upperincome mall; and Gulf Mall has been positioned to cater to the value-conscious segment. The fourth property is Place Vendôme. There is space in the market to cater to different population segments. Even though Gulf Mall was opened in close proximity to Landmark Mall, it has not impacted the foot traffic as the visitor profile for each of these malls is different. The tenant mix is very important to ensure you don’t cannibalise your existing customer base, so we have been upgrading the tenants in Landmark to differentiate it from the offerings at Gulf Mall.
What notable features are local developers pursuing in terms of tenant mix to differentiate offerings between malls?
AL RABBAN: At the end of the day, there are only a few major retail groups in the region. If you can succeed in bringing them to your mall, then the mall will be successful. The regional retail groups own multiple brands in their portfolios, so ensuring a good tenant mix means you have to secure contracts with the companies involved in retail regionally. However, the number of properties coming online has substantially increased competition amongst developers as they are all vying to get these retailers to enter their malls, and I know that most of them have already selected which properties they will be working with. Upcoming malls that are located within similar catchment areas to existing malls will face some difficulty in securing the proper tenant mix; many retailers are already present in competing properties close to each other.
How is Qatar aiming to compete with other regional retail hubs such as Dubai?
AL RABBAN: The potential for Doha to compete as a regional retail hub with Dubai is definitely there given the number of mega-malls in development. At the moment, the infrastructure of the city itself is lacking, particularly in hotels, which can aid the development of the hospitality industry. Unfortunately, all of the properties that have been built in Doha are luxury hotels in the five-star and five-star plus range. The demand is there to support three and four-star properties, and guests at these hotels will be the ones that support Qatar’s development as a regional retail hub.
All mega-mall developers are looking for the support of the government to ease entry requirements for people visiting Qatar, as well as make it more accessible from an economic standpoint for Gulf nationals to come to the country. For example, at Villaggio alone there are approximately 12,000 Saudis visiting the mall each weekend, which is a huge driver of the mall’s revenue. If hotels were more moderately priced, there would be an even greater number of visitors from Saudi given our close proximity.
Are retailers concerned that consumer spending could decrease given reductions in state revenue due to lower energy prices?
AL RABBAN: Today, 70% of retail revenues derive from the local population. In luxury spending, 95% of revenues come from locals. So yes, reductions in state revenue will impact the purchasing power of Qataris and in return impact consumer spending. We just hope, as retailers, that the standard of living of Qataris is not affected, because it will create a chain reaction in the market. Even for local luxury retail, most consumers are upper-middle-class Qataris who buy in Qatar and do not travel that often. The ultrahigh-net-worth individuals that shop abroad represent a very small percentage of the total population.