Abdulrahman Al Ansari examines claims that the United Arab Emirates’ (UAE) retail market will grow moderately this year, before expanding rapidly in 2017.
UK-based market intelligence consultancy Euromonitor has forecast that the value of the UAE’s retails market will expand by 7% in 2016, to reach US$53.7 billion. Speaking to Gulf News, a regional news site, Fareed Al Gurg, the general manager of Dubai-based conglomerate Easa Saleh Al Gurg Group, expressed a different opinion.
Due to high Emirati retail rents and low global oil prices, he expects “the growth to be between 3.5% and 4%” in 2016. The UAE is a somewhat oil-based economy; global oil values have fallen by around 70% since mid-2014, limiting UAE economic growth.
With the strength of the US dollar – to which the UAE’s currency (the dirham) is pegged – against the rouble and the euro throughout the past year, holidaying in the Emirates has become more expensive for Russian and European tourists. In turn, Al Gurg pointed out that this has reduced the purchasing power of Russian buyers since 2014, impacting the UAE’s retail sector growth.
However, Al Gurg also noted African and Indian buyers have been spending more money in the UAE. We also know that the Emirates is currently looking at ways to reduce its dependence on oil. The country’s Minister of Economy Sultan Bin Saeed Al Mansouri said in late 2015 that the UAE is hoping to increase non-oil contribution to Emirati Gross Domestic Product (GDP) from 70% to 80% within the next 10 – 15 years.
Al Gurg predicted that UAE retail sector growth will become more rapid in 2017, as new attractions open. Continuing, he said: “In Dubai, there will be new theme parks opening this year and new hotels up and running, as well as new restaurants. All of this will attract more people who will spend. Instead of spending three days, tourists will spend five days, for example.”
Tourism and retail
Knight Frank’s UAE Retail Focus Autumn 2015 report also linked the UAE’s retail sector to its tourism industry. Commenting on this, head of retail at Knight Frank UAE Matthew Dadd said: “Though retail supply per capita in the UAE is one of the highest in the world, the market… has a lot of potential over the next decade. Growth in the non-oil economy, particularly the tourism sector, the increase of population and income and the upcoming international events are all pointing to a positive outlook for the retail sector in the UAE.”
Continuing, Dadd said: “The UAE has cemented its position as the preeminent shopping destination in the region. Shopping among locals and Gulf Cooperation Council visitors is a popular leisure activity in its own right and both Dubai and Abu Dhabi have responded to the evolving regional demand by expanding their retail offering and enhancing entertainment attractions.”
Also commenting, Knight Frank Middle East and North Africa researcher Diaa Noufal said: “Local mall developers are keen to keep up with the growing demand by attracting new brands to the market, while international retailers are eying the UAE as their next shop address due to the country’s economic resilience compared to the waning global economy.”
Despite sliding global oil prices the International Monetary Fund, which fosters global monetary cooperation, predicts that the UAE’s economy will expand by 2.6% in 2016. Therefore, a resilient economy that’s increasingly reducing its dependency on oil has attracted international retailers to the UAE. Along with the Emirates’ growing reputation as a premier shopping destination among international tourists, this could allow its retail sector to record moderate expansion in 2016 before growing at a more rapid pace throughout next year.
About Abdulrahman Al Ansari
Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.