Slump in Rus­sian tourists slows down Dubai lux­ury re­tail sec­tor

The Pak Banker - - BUSINESS -

With fewer tourists vis­it­ing Dubai from Rus­sia and Europe, re­tail­ers have wit­nessed a slow­down in sales, par­tic­u­larly in the lux­ury end of the mar­ket.

Ac­cord­ing to a re­port by Jones Lang LaSalle (JLL), Dubai's re­tail sec­tor did not post a stel­lar per­for­mance dur­ing the sec­ond quar­ter of the year, as the num­ber of trav­el­ing lux­ury shop­pers has de­clined.

"Re­tail sales con­tinue

to slow down, par­tic­u­larly in the lux­ury seg­ment, as tourist spend­ing from Rus­sia has de­clined," JLL said. Dubai's mas­sive shop­ping malls, with their ex­pan­sive col­lec­tion of in­ter­na­tional re­tail brands, had been a reg­u­lar mag­net for cash- flush tourists, es­pe­cially from Rus­sia.

How­ever, the re­cent de­cline in some cur­ren­cies against the US dol­lar, cou­pled with the con­tin­ued fall in the price of oil, means that trav­el­ers from cer­tain mar­kets are now find­ing it ex­pen­sive to spend their money in the emi­rate. The de­pre­ci­a­tion in pur­chas­ing power has ul­ti­mately forced many con­sumers to re­duce spend­ing and put ex­pen­sive travel plans on hold, lead­ing to a de­cline in Rus­sian tourist traf­fic to Dubai.

Dubai is still get­ting some tourists from other mar­kets and it now "sees a change in its visi­tor pro­file, with fewer tourists from Rus­sia and Europe, and more from Asia and Africa," ac­cord­ing to JLL. "Rus­sian trav­el­ers to Dubai have sig­nif­i­cantly re­duced due to their so­cio-eco­nomic sit­u­a­tion," Habib Khan, gen­eral man­ager at Ara­bian Court­yard Ho­tel and Spa, told Gulf News.

De­spite the slow­down, Dubai's re­tail sec­tor will con­tinue to ex­pand, with some 194,000 square me­tres of gross leasable area, mostly shop­ping mall ex­ten­sions, ex­pected to be com­pleted be­fore the end of the year.

Aside from the lux­ury seg­ment, another area of con­cern is the food and bev­er­age mar­ket in Dubai. Given the num­ber of new restau­rants, cafes and other F&B out­lets that have re­cently opened up, the mar­ket is fac­ing "sat­u­ra­tion" and JLL said re­tail­ers have "come un­der pres­sure" to set them­selves apart from the com­pe­ti­tion. "The F&B mar­ket in Dubai has un­der­gone sig­nif­i­cant ex­pan­sion of the past cou­ple of years, and is set to grow fur­ther in the near fu­ture as de­mand re­mains strong." "How­ever, given the cur­rent lev­els of mar­ket sat­u­ra­tion, re­tail­ers have come un­der pres­sure to dif­fer­en­ti­ate their of­fer­ings in or­der to at­tract foot­fall and main­tain their com­pet­i­tive edge."

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