If the UAE is known for anything, luxury goods is certainly a contender. Residents are exposed every day to a world where luxury is less an indulgence and more of a lifestyle, and huge numbers of the tourists who visit the UAE every year include shopping for high-end goods on their itinerary.

While most of the luxury goods sold here are from international brands, there is increasing potential for local brands to gain market share.

Market size

  • The UAE is the world’s tenth biggest luxury market, with an annual value of over 7bn AED.
  • The wider GCC region has generally exhibited a healthy appetite for luxury goods. In 2014, Knight Frank’s Luxury Opportunity Index ranked the Middle East as the second largest luxury retail destination, after Africa. Qatar, the UAE and Oman hold the top three positions on the index, with the fastest growing spending potential in the short and medium term. Rankings on the index are based on parameters such as the number of luxury retail outlets, premium air travel, air traffic, ability to create wealth and economic growth.
  • Dubai is the most popular shopping destination for high net worth individuals, largely from China, Russia and other Asian and Arab countries. Dubai alone represents 30% of the total Middle East luxury sales and 60% of the UAE’s luxury disposable incomes in the world. (Source: Luxury Goods Worldwide Market Study, Spring 2014)
  • Factors such as high disposable income, increasing exposure to the western world due to urbanization, large expatriate population and high tourism growth have added to the appeal of the GCC region as a lucrative market for the top global luxury brand retailers.
  • The high-end fashion and accessories segment represented 40% of the GCC luxury retail market in 2013, while hard luxury products (such as watches and jewellery) accounted for 35%. The beauty products segment accounted for 25 per cent of the market in the year.

Growth

  • The luxury retail market of the GCC has shown a continuous growth over the years, with a yearly growth rate of 5%-8%. (Source: The Knight Frank Wealth Report, 2014)
  • This trend is likely to increase, even despite a slowdown in spending by Russian tourists in 2015 (numbers were down 36 per cent in February).

Opportunities

  • The creation of d3 – Dubai Design District – will help local designers and luxury brands to compete even more than before. In particular, it opens up the doors for a local luxury brand to aim at one day becoming a global name: something that hasn’t yet happened in the same way it has in other sectors (ie Emirates in travel).

 

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