GCC’s retail market is set to become a $221 billion industry by 2015
The Gulf’s retail market is set to become a USD 221 billion industry by 2015, growing remarkable at 7.9% each year for the next three years, according to Markaz, Kuwait Finance Centre. “Higher per capita income and younger demographic profile of the nationals has a positive implication for the demand of high value luxury goods and electronics goods while the working expatriate population supports the surging demand for consumer goods,” noted Markaz.
Regional governments and the private sector have also been investing heavily in improving infrastructure to attract tourists to their countries. “In [the] last few years, a number of grand malls and shopping complexes have opened across the GCC. With such positive developments and encouraging trends, the GCC retail industry is set to grow further in the near future.
Real estate consultant CB Richard Ellis placed Dubai as the fifth “hottest” retail market in the world, and the second best retail market in the world after London. Meanwhile, AT Kearney has four Gulf states among the top 20 countries in its annual 2013 Global Retail Development Index. The UAE (5), Kuwait (9), Saudi Arabia (16) and Oman (17) are eagerly sought after by global retailers.
Dubai’s gross leasable area is expected to rise 14% by 2018, while Abu Dhabi is even higher at 48% during the same period. “Demand continues to grow in Dubai, even as it is fully saturated with global brands. European concepts are fully represented now and no longer represent a way for malls to stand out,” noted AT Kearney in its report.
The Cheesecake factory, IHOP, Hollister and Abercrombie & Fitch are some of the major American retailers to enter the Dubai market last year. “Retailers are updating and repackaging their existing offerings. Chalhoub Group, a leading luxury retailer, opened the largest shoe store in the world in Dubai, featuring leading brands such as Gucci, Prada and Louis Vuitton.”Abu Dhabi is also expected to benefit from the launch of the Louvre and Guggenheim museums, and attract well-heeled buyers as well.”
But the region’s largest retail market is Saudi Arabia and NBK Capital believes the country is just getting started. “With 30% of the population of 29.2 million (as of 2012) below the age of 15 years, the younger population transitions into the work force, overall disposable income in the country could grow enormously. Demand for consumer goods is expected to outpace the growth in the general population.” The bank believes as many as 1.7 million Saudis are expected to enter the working age over the next five years, which would add to the momentum. In addition, the Saudization drive means a rise in disposable income and strengthening of purchasing power.