Down at the Store

Qatar

Economic News

22 Jul 2010
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With Eid just days away, Qatar's small shop owners are hoping that the usual boost in sales the holiday brings will help them out of a recent slump. Yet across town at the nation's hypermarkets there's quite a different story, with store managers reporting a major boom this year.



The contrast underscores a growing gap between Qatar's rich and poor, with analysts and shop owners saying that rising rents are responsible for much of the difference. While poorer expats - the main customers of the local small corner market, or suq - are being driven out by escalating housing costs, wealthier expats and nationals continue to shop till they drop in the larger, edge-of-town hypermarkets.



Indeed, business is so good for these giant complexes that on October 29, plans for yet another one were announced.



The luxury, state-of-the-art hypermarket will be one of the largest in Qatar and will be located at al-Khor, north of Doha, and is scheduled to be completed by the end of 2006.



The project will be on a 30,000 sq metre site, of which 12,000 sq meters will be covered. Within this there will be a family shopping centre, two branches of leading local banks, 19 shopping outlets, a cinema, restaurants, fast-food stores and a two-storey administrative building. There will also be a special play area for children, a parking lot for over 400 vehicles, a residential complex with 20 three and four-bedroom villas, with a swimming pool, a social club, sports grounds and entertainment units.



The news of this new development came amidst reports from many hypermarket and large format storeowners that business this year has been better than last. Although some expats have left, plenty more have taken their place, managers say, while at the same time there has been an increase in the number of expat professionals with higher disposable incomes working in the country.



Meanwhile, back at the local suq, storeowners have been voicing their disquiet to the local paper, The Peninsula, over low retail activity this season.



"The festival season this year reminds me of the dull Eid during the Gulf War [of 1991]," one shop owner in the Suq Nasser told the paper in its October 30 edition. "There are hardly any shoppers."



The most often stated reason for this is that high rentals are driving many people out from Doha, particularly expat families. Whereas in the past workers might have been able to afford accommodation for themselves and their dependents, the rest of the family is now often being sent home, shrinking the customer base of the lower-end retail outlets.



The government is well aware of the problem. In particular, addressing the issue of high rents is a major concern. Much of the rise in prices is due to a housing shortage in the Doha area, as the population expands while construction of new homes has not kept pace.



Yet there is a light at the end of the tunnel. Minister of Economy and Commerce Sheikh Mohammed bin Ahmed Al Thani told reporters on October 29 that he expected the housing shortage to ease in around 18 months.



Indeed, given the vast number of new projects underway, a solution should not be long off.



On this score, news came earlier this month that the Qatar Real Estate Investment Company (QREIC) had received approval for construction of a huge residential project in the Mesaieed Industrial Zone, south of Doha.



Costing some QR800m ($219.7m), according to Qatari newspaper al-Raya's October 16 edition, the project will see some 1244 housing units constructed. Work will start at the end of 2005 and is scheduled to run through to the end of 2007.



QREIC is also involved up at al-Khor, the site of the new hypermarket scheme. There, it is running a project that includes construction of 1700 housing units and their associated infrastructure. This QR700m project is targeted at the gas and oil-related companies at neighbouring Ras Laffan. With work starting at the end of this year, the project should be completed in 2007.



Thus Qatari residential housing projects are forging ahead, with the likely effect of pushing down rental costs, which might make Doha more affordable for many.

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