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MarketScreener Homepage  >  Equities  >  Nyse  >  Cushman & Wakefield plc    CWK   GB00BFZ4N465


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Cushman & Wakefield : COVID-19 Impacts on Qatar Real Estate

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05/28/2020 | 02:01pm EDT

Maria Maximova, MSc
Senior Research Analyst
Cushman & Wakefield Qatar

Qatar Development Bank (QDB) allocated guarantees to local banks at an amount of almost USD 1 billion under the National Response Guarantee Program. The program is a 100% guarantee scheme of the Government of Qatar to help mitigate Covid-19 impacts by relieving the most critical short-term payments private sector employers will face during the next three months as it includes staff salaries and rent. Initially real estate, construction and contracting sectors were excluded from the National Guarantee Program; however, it was announced last week that construction and contracting would be included in addition to extending the interest free period to 1 year.

Prolonged Eid holidays started last week for the public sector. Additionally, all standalone retail outlets have been ordered to shut down until the end of the month with an exception of grocery stores, pharmacies and F&B (take away only). At the same time a 'recovery readiness' plan has been announced by the Government, consisting of four phases, likely to take place over summer. It features staggered re-opening of different sectors, with the final phase permitting flights, cruise ships, limited public transport, F&B restricted operation as well as 'gatherings and sports' activities such as cinemas and mass sports events.

21 May

The Industrial Area of Doha partially reopened this week, having been under quarantine for almost 2 months. This area has the largest concentration of warehouse and logistics buildings in Qatar, and its lockdown had a significant impact on Qatar's domestic economy.
A recent increase in new Coronavirus cases suggests that it will be some time before most businesses can start to reopen to customers. Retail and restaurant restrictions remain largely in place, although F&B outlets may now resume their take-away service. Restaurants had previously been restricted to delivery service only.

Currency exchange houses were permitted to reopen this week. These exchanges play an important role in the GCC due to the high concentration of foreign workers sending cash remittances home.

In order to reduce the dependence on cash transactions, Central Bank has increased the limit on contactless card payments. They have also issued guidance to domestic workers to utilise their bank accounts rather than relying on cash. Meanwhile, some banks introduced specific policies in terms of handling cash and cheques from their customers to reduce the number of visits to a branch. Cheques remain a widespread form of payment throughout the Gulf region; however, the COVID-19 pandemic is now accelerating the transformation to on-line banking services and electronic transfers.

14 May

The impact of the coronavirus on the commercial office market has been limited to date. That is mainly due to activity in the sector being driven by lease events such as lease expiries, which still need to be acted upon. Occupier relocation projects that started before the COVID-19 measures were introduced are mainly progressing as planned. Tenants are still able to access their offices, subject to government guidelines of reduced staffing and hours; therefore, there have not been multiple announcements by landlords on rent relief.

Amenity provisions in residential developments have been ordered to close, while service staffing levels have been reduced to a skeleton staff in many cases. These measures, together with social distancing restrictions, are making it challenging to lease property. As health and safety concerns increase, leasing agents are increasingly turning to virtual tours to market their properties.

Ramadan ends with the Eid holiday which can take up for a week for the public sector. Hotels, malls, and the F&B sector are usually very busy around this time, but whether the restrictions would be lifted by this time is yet to be seen. The hotel statistics, only available up until April, are yet to fully incorporate the lockdown effect. Anecdotal evidence may suggest that, with the Government taking over several hotels to use for quarantine purposes, occupancy levels may in fact show an increase.

7 May

The onset of Ramadan has not changed much with many businesses already working reduced hours and the F&B outlets open for take away only. Qatar is well adapted to restricted hours during the holy month. Since Google Maps is a global equivalent of a retail footfall counter, with the data now being made available, the effects of both can be quantified.

On a Thursday night, there has been an increase in people staying in, with almost 30% staying more at home in general. While Friday afternoon and late evening are normally the busiest times for the malls, street retail (weather permitting) and museums, this category has seen a drop of 72% in visits, even before Ramadan. Not surprisingly, 70% fewer people made it to the parks on the first day of Ramadan.

As for the groceries and pharmacies, the only stores permitted to trade 7 days a week within a mall, the maximum decrease of visits on Friday was 47%. By the second week of April, it appears that many employees got used to working from home as there is no drop in Saturday visits to a workplace anymore, with an overall decrease of visits of just under 40%.

30 April

Despite the restricted hours of Ramadan, it is normally a busy time for supermarkets and F&B outlets (after sunset), including those based in hotels. Ramadan tents are being set up, serving iftar and suhoor meals for companies and families until late at night. The F&B sector is an important part of the retail scene throughout the year in Qatar like elsewhere in the Gulf for locals and expatriates alike.

This Ramadan is going to be different with F&B retailers already hit with even tougher pandemic restrictions. Not every outlet was able to adapt quickly to work for take away only, while simultaneously losing cashflow. Fortunately, it appears many landlords recognised it, having granted rent relief to their tenants, particularly F&B ones, for several months.

Additionally, some sectors have been exempted from electricity and water charges (provided by a government monopoly) for 6 months: retail, hospitality and tourism, some SMEs, commercial and industrial provided it trickles back to their tenants.

For many F&B tenants, even service and marketing charges are detrimental to their cash-starved business, with the online/phone orders often accounting for a very small share of their prior revenue. Meanwhile, the delivery companies have capitalised on an unprecedented demand.

23 April

Qatar started implementing lockdown measures on 17 March, announcing a US$20 billion aid package shortly afterwards. In terms of resilience the 2017 blockade by the neighbouring countries has been an important learning experience for Qatar.

The immediate effect has been on the hospitality and retail industries with the airport and malls almost completely shutting down. The grocery sector along with pharmacies and food delivery have all seen sales growth.

The Government and semi-Government entities announced rent relief for their retail and/or F&B tenants either for 3 to 6 months starting from March or April or until further notice with the private landlords to follow suit. Still many employers in the affected industries started to furlough staff, reduce salaries or make people redundant.

As a result, residential landlords have started working out policies on deferring rental payments or providing temporary/permanent discounts. On the other hand, some people are using this time to upgrade their current accommodation as now they are spending a lot more time at home, some with their children.

The commercial sector has seen many transactions put on hold or rent commencement dates pushed forward, many tenants are considering serviced office options instead of conventional offices.


Cushman & Wakefield plc published this content on 28 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 May 2020 18:00:08 UTC

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