Retail sales in the UAE are forecast to grow by 59 per cent by 2013, outpacing the expansions in Saudi Arabia, Bahrain, and Kuwait, according to a London-based market research firm. Business Monitor International’s latest retail report estimates that retail spending in the Emirates will rise to US$164.96 billion (Dh605.82bn) by 2013 from $103.5bn last year, based on economic growth, increasing household consumption, growing expatriate wealth and a maturing retail market.Comparatively, retail sales in Saudi Arabia, Bahrain and Kuwait, the other markets that BMI covers in the GCC, are forecast to grow at just 24.6 per cent, 10.8 per cent and 30.8 per cent respectively.In Saudi Arabia, retail sales are expected to rise from to $96bn in 2013 from $77bn last year. In Bahrain, sales will grow to $4.80bn in 2013 from $4.33bn last year, while Kuwait is expected to have sale rise, during the same time frame, to $51bn from $39bn.Lyndsey Anderson, a food and drink analyst at BMI, said the UAE was expected to fair better than its peers due to “higher tourist spending and higher expat spending. Both have been hit by current economic conditions but both are set to return to their positive positions.”Retail is one of the biggest non-oil contributors to the UAE GDP, and the Emirates was recently rated as the fourth most attractive destination for international brands, just behind London, Paris and New York.However, the last six months have been difficult for the retail sector, which had grown accustomed to double digit sales growth annually.Retailers have reported a drop of as much as a 40 per cent in sales in the first half, compared with the same period a year earlier, in the wake of the economic downturn. Still, BMI expects this to have a short-term impact, and retail sales will rebound based on increased tourism and growing urbanisation, especially in Abu Dhabi. The capital has been pegged as one of the next big retail hotspots, due to upcoming projects such as the Formula One racetrack on Yas Island and museum developments on Saadiyat Island, according to management consultancy AT Kearney.Retail space in Abu Dhabi is also expected to grow 70 per cent to 1.2 million square metres from 700,000 sq metres in the next two years, according to the firm. BMI also cites growth of the UAE’s population in the 20-44 age bracket, crucial to the retail sector for its spending power.According to UN figures, just 30 per cent of the population fell into this category in 2005 and it is expected to hit 57.6 per cent by 2015, BMI said. Ashish Panjabi, the chief operating officer of Jacky’s Electronics, said he expected retail sales in the UAE to grow in the coming years because it continues to be the go-to tourist destination in the region. “What we are seeing is the (Government) spending or investment in tourism, whether in terms of hotels, theme parks, in terms of the new malls coming up,” he said. “If we get the tourists here, there are a lot of ways to make money.”Vipen Sethi, the chief executive of the Landmark Group, said another factor is the UAE Government’s recent move to eliminate the minimum Dh150,000 capital requirement for new businesses, which will make it much easier for people to set up new enterprises. This, coupled with investments in infrastructure such as the soon-to-open Metro system, make it a key destination for business and tourists, he said. “I have full faith that the UAE market will come back sooner than other GCC markets,” he said. Laurent-Patrick Gally, a retail analyst at Shuaa Capital, agrees, but expects Saudi Arabia to also be a strong market for retailers. “There is a huge young population, with 50 per cent of the people less than 25 years old,” he said. “The people who are now between 14 and 16, over the next three to four years will become adults, get jobs and increase their spending power. We would expect Saudi Arabia to fare very well.”However, Mr Gally said the UAE is still the “big magnet” for tourism in the region, which will in turn drive retail sales.
Source: The National
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