UAE and Saudi Arabia to lead retail sector growth
dubai — The GCC retail industry will grow four per cent from $253.2 billion in 2018 (Dh929.24 billion) to $308 billion (Dh1.13 trillion) by 2023, driven by growth in population, tourism, per capita income and mega event like Expo 2020 and Fifa World 2022, says a new report on Monday.
The study predicted that the annualised growth in retail sales in the GCC nations is projected to range between 2.2 per cent and 5.1 per cent. UAE, Kuwait and Qatar are expected to record faster growth driven mainly by increase in tourism activity, GDP per capita and penetration of organised retail stores.
Regionally, the UAE and Saudi Arabia are expected to continue to dominate the retail sales in the region, cumulatively accounting for 76.9 per cent of the total retail sales in 2023.
Dubai-based consultancy Alpen Capital predicted that the Saudi Arabia will account for 44.6 per cent or $113 billion of the total Gulf retail spending last year followed by UAE at 32 per cent or $81 billion; Qatar 9.2 per cent or $23.3 billion; Bahrain at 2.2 per cent or $5.57 billion; Kuwait at 6.6 per cent or $16.7 billion; and Oman at 5.4 per cent or $13.67 billion.
By 2023, retail sales in the region’s largest economy Saudi Arabia will reach $132.7 billion while UAE will see retail sales at $104.1 billion. It said the 197,000 square metres of retail space was added in Dubai during 2017 and 182,000 sqm in 2018, bringing the total supply in the Emirate to 3.8 million sqm as of 2018-end. The supply of retail space in Abu Dhabi stood at 2.7 million sqm with the addition of 28,000sqm of retail space in 2017 and 2018.
Krishna Dhanak, executive director, Alpen Capital, believes that with the expected addition of new retail space from the construction of new malls, retail rents in Dubai may face pressure to avoid an increase in vacancy rates.
Some of the key upcoming projects in Dubai include Dubai South Mall, Dubai Mall Boulevard expansion, the Night Souk on Deira Islands, Nakheel Mall on the Palm Jumeirah and Dubai Hills Mall.
Since luxury spending by the Middle East consumers have exceeded global averages, particularly with personal luxury goods, Dhanak said a number of international brands are looking at entering the regional markets, especially in cosmetic, beauty products, highend accessories and apparels. —