Mid East US$ 100 billion retail boom to outpace global slowdown
The retail phenomenon sweeping through the Middle East – and Arabian Gulf states in particular – is robust enough to withstand a US-led global economic downturn, says an industry expert.
“With the Middle East retail sector estimated to be worth in excess of US$100 billion annually, second only to residential property in the non-oil economy, the issue is of critical importance, but one which the GCC economies can cope with,” said Naomi Koningen, Project Manager of Retail City 2008, organised by IIR Middle East.
“Dubai, in particular, has one of the most saturated retail environments in the world and is the regional hub for retail therapy accounting for a quarter of the total retail space in the GCC. However, according to the Department of Tourism and Commerce Marketing (DTCM) Dubai's tourist arrivals grew to 5.1 million in the first nine months of 2007, almost five times the size of Dubai’s population,” Koningen added.
Retail City, which takes place from 1-3 June 2008 at the Dubai International Exhibition Centre, will bring together global retailers, investors, shopping centre developers, franchise networks, shopping centre managements, architects and regional authorities to focus on all aspects of the retail development cycle.
“The current global credit crunch may have emanated in America but in most emerging markets, local sources of economic growth, including consumer spending, have firmly taken root,” Koningen added.
One major difference is that the US and the UK economies in particular rely heavily on consumer spending. For example retail sales in the US contribute up to 70 per cent of their GDP and according to Morgan Stanley, Americans spent an estimated US$ 9.5 trillion last year, twice that of Chinese and Indian consumers between them.
Emerging markets – including those in the GCC – have fast growing consumer economies, which continue to develop ambitious retail infrastructure projects. However, these economies have accumulated large petrodollar reserves to cushion themselves against the effects of a US slowdown.
“This has placed them in an enviable position,” Koningen said. “For example, according to Lehman Brothers, in the hopefully unlikely event that growth in industrialised countries actually fell to zero - which last occurred in the early 1980s - growth in Asia outside Japan would only be halved from last year's 8.7 per cent.
“While it is a fact that no country can decouple entirely from the vagaries of the US economy – much less those in the GCC whose currencies remained pegged to the US dollar – it is highly unlikely that the retail issue will be brought into question.”
New at this year’s Retail City event will be two complementary pavilions dedicated to retailers, malls and their operators. Retailers from emerging markets can network and exhibit to expand their brand and put themselves in direct contact with mall management, retail developers, investors and operators. The Malls and Operators Pavilion will provide regional operators with the opportunity to promote their services and activities to retailers from local and emerging markets.
© 2008 Al Bawaba (www.albawaba.com)