Over the course of the past decade, Dubai has become synonymous with luxury goods. According to the Dubai Statistics Centre, the retail, wholesale and repair segment accounted for 30.7% of GDP in 2011, up slightly on 30.1% in 2010 and 29.7% in 2009, and much of which is accounted for by the high-end segment. The emirate acts as a retail centre for the region, especially in the case of luxury goods, which either may not be available in other countries, or if so, may be markedly more expensive. Additionally, with high salaries among both Emiratis and many expatriates, there is a large market for consumers of luxury items.
The relatively high concentration and availability of such goods (aided by the emirate’s tax-free status) has undoubtedly played a big role in the city’s emergence as a global tourism and leisure destination. Thus, retail can be said to underpin many of the emirate’s other leading industries, such as tourism and real estate, and thus plays an even more important role than the headline figure suggests, and luxury retail even more so.
AT THE TOP: Items such as jewellery and precious metals, high-end automobiles and branded clothing and fashion accessories are generally regarded as luxury items, along with less tangible goods and services such as fine dining, artisanal foodstuffs and exclusive leisure resorts. According to a report on the GCC retail industry from Alpen Capital, Dubai was ranked at the top alongside London in terms of international retailers’ presence in 2011. The same report put the value of the luxury goods market in the Middle East at $5.4bn in 2010, and noted that Dubai was likely to remain the focal point for luxury retail in the region given its significant tourist traffic and sheer concentration of luxury outlets.
Duty-free sales, which often feature upmarket products such as perfumes and watches, are also worth noting. Together, global duty free and travel sales were worth some $39bn in 2010, according to Alpen’s findings. Dubai Duty Free had a 5.4% market share of global airport shop sales and 3.2% of the duty-free market, making it the world’s largest single airport retail operation.
RISING AUTO MARKET: A study by the UAE Ministry of Foreign Trade put the value of the automotive market in the country at $11.1bn in 2011, up 19.7% on $9.2bn in 2009. The value of the small and luxury car market (counted as one segment in the study) rose 24% over the same period to reach $10.6bn in 2010.
The luxury end of this segment appears to be showing marked growth. BMW Group Middle East, for instance, announced a 13% rise in sales in the first half of 2011, with purchases in Dubai rising 29%, while Audi, a high-end subsidiary of German car manufacturer Volkswagen, reported at 18% rise on sales over the same period. In October 2012, local press reported that the volume of sales in the UAE had surged 30%, passing the 200,000 mark. Habtoor Motors, a UAE dealership, claims the number-one ranking for Bugatti sales, and stands in second place for sales of Bentleys.
GROWTH IN SALES: Dubai is also an important market for gold, diamonds and jewellery. In the first two quarters of 2012, the Dubai Multi Commodities Centre reported gold imports worth $9.7bn and $10.5bn, respectively, compared to figures of $7.8bn and $7.4bn for the same periods in 2011. Gold exports amounted to $6.6bn in the first quarter of 2012 and $9.7bn in the second quarter, compared to $5bn in the first quarter of 2011 and $5.2bn in the second. The value of diamond sales, which accounted for more than 50% of the jewellery trade in Dubai, according to the Dubai Diamonds Exchange, was worth $35bn in 2010. These numbers are indicative of Dubai’s growing importance as a centre for the commodities trade in the sector.
Part of the demand comes from South Asia, where gold is often held as a hedge against other investments in addition to its aesthetic role. The relative proximity to Dubai (only a few hours’ flight from most cities on the subcontinent) and huge Asian expat community have helped make it a gold entrepôt for the region. With surging demand from within the Middle East, the price of gold rose 14% year-on-year during the first half of 2012, from $1445 per ounce to $1651 per ounce.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.