Retail sector sales in the Gulf states are expected to grow at a CAGR of 8.3 percent between 2010-2015, reaching $240.3 billion by the end of the forecast period, a report said.
Growing per capita GDP and disposable income, expanding population base and consistent inflow of tourists will boost the region’s retail sector going forward, said the Alpen Capital report. Retail sales of supermarkets and hypermarkets in the GCC are estimated to expand at a CAGR of 10.7 percent between 2010 and 2015, thus outpacing the broader retail industry. Middle East duty free and travel retail sales are projected to expand at a CAGR of 9.9 percent during the period.
The Middle East luxury goods market looks poised for strong performance going forward. The region’s luxury goods sector is estimated to expand at a CAGR of 8.5 percent within the same period, the report said. Having contributed substantially to overall retail sales expansion, the mid-market segment has broadly tracked the overall retail industry growth trajectory and is expected to continue on a similar trend going forward.
Retail sales of all the GCC economies are expected to register a CAGR of mid to high single-digits between 2010 and 2015. Given a larger size of the population base, Saudi Arabia will continue to account for the largest slice of the GCC retail industry. Based on projections, it is estimated to grow at a CAGR of 9.4 percent and increase its share in the total GCC retail sales from approximately 42 percent in 2010 to 44 percent by 2015. UAE and Qatar are expected to show a robust growth at 7.9 percent and 7.7 percent respectively, the report said.
Approximately 5.4 million sq m of area was under planning and development in 2010 in the GCC, which is likely to be gradually added to the existing GLA of 10.3 million sq m by 2015. As per Alpen’s projections, around 65 percent of the pipeline will be added to the current stockpile by 2013. Assuming an 80 percent occupancy rate (medium growth scenario), total occupied retail GLA in the GCC is forecast to reach 11.1 million sq m in 2011 before expanding to 14.6 million sq m in 2015. Current demand for high quality retail space remains strong in the GCC and new shopping malls are likely to enjoy healthy absorption rates. The demand and supply factors therefore seem to be in balance and supply of new GLA in the future will be sufficient to meet demand for retail space over the next five years, the report said.
“The retail industry has been one of the fastest growing sectors in the Middle East for the last few years. It is the second largest sector in the GCC region, and is considered to be the most preferred means of promoting diversification and sustained economic development in the region,” said Sameena Ahmad, managing director at Alpen Capital. “The industry is dominated by a number of privately held companies, whose relentless drive and innovation has transformed the retail landscape of the region.
These companies have shown great resilience in the face of the economic crisis and now face a period of healthy growth ahead of them,” she added. “While the financial crisis slowed down the pace of growth, the GCC retail sector continues its uptrend supported by fundamental drivers, including growing affluence and disposable income, rise in tourism, and a large expatriate population, favorable demographic factors, and large-scale infrastructure development,” said Mahboob Murshed, managing director, Alpen Capital.
