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-Al Mazaya: Increasing tourist arrivals enable Gulf markets to avail themselves of the growing demand for upmarket commodities

-Urban expansion, growth in upscale lifestyles go in parallel across modern economies

-UAE is the world’s fifth-most attractive destination for retail investment

Rapid urban expansion, the accelerated pace of commercial activities and rising per-capita income levels over the past few years have created a state of integration between luxury real estate global brands.

In light of the urban evolution currently witnessed in the region across all fronts, we see emerging integration between urbanism and luxury brands, with the expansion of the two sectors moving in parallel. Luxury brands are establishing themselves with each new real estate project, ensuring competitiveness and meet rising demand for current and potential customers and tourists, leading to the emergence of new brands on the scene, and creating a state of balance and economic recovery in the local markets.

The weekly report issued by Al Mazaya Holding Company pointed out that the tourist boom witnessed in the region has become a major driver of the luxury goods market. The region’s markets have become one of the most preferred destinations for many tourists around the world, as a result of the paradigm change in consumer habits and their noticeable tendency towards buying luxury products, a fact the region’s markets have become well aware of and, therefore, realised the right way to satisfy their customers’ needs.

Al Mazaya report confirms that the growth of luxury brands across the region is part of the significant improvement witnessed by the middle class, who have become a new generation targeted by these brands. The growth of this class along with the wealthy one has contributed significantly to increasing the number of stores and volume of investments, in both the digital and physical shopping worlds, which directly contributed to the growth of the luxury market in the region.

According to Al Mazaya report, the UAE markets have accumulated considerable experience in terms of the ability to stimulate non-oil economic sectors, especially commercial and hospitality activities. As the UAE economy is moving at an accelerated pace towards digital economic transformation, witnessing significant increases in the number of shoppers and e-payments, e-commerce is projected to further grow over the next few years by at least 23% until 2022, at a total value of US$ 16 billion.

The UAE is the fifth largest global investment destination in the retail sector, continuing to lead the region in terms of annual retail sales by 5.1% in 2018, at a total value of about $104 billion by 2023, accounting for about 34% of the total regional sales.

According to Al Mazaya report, population growth, the stability of oil markets and continued tourist mobility, as well as improving income rates are all factors that contribute to the expansion of the retail sector and increasing demand for retail spaces to attract more global brands.

Al Mazaya underscores the close relationship between investments in hospitality and leisure projects and the growing demand for retail, which has led to a solid conviction in the feasibility of building more shopping malls across the region.

Many major and capital cities have become attractive destinations for investment, business and retail activities, which has helped retail sectors to grow and attract major brands, thus ensuring stable demand for retail space and continued investments in this direction.

Luxury commodity markets have grown by 6% to 8% over the past year, amounting to € 281 billion, and are expected to achieve global sales of €390 billion by 2025. Within this context, Dubai remains the leading regional retail hub thanks to its proven ability to attract consumers of luxury products with an integrated infrastructure that provides all the requirements for luxury living.

The mobility of the luxury goods markets and the significant expansion witnessed by the industry reflects positively on all economic sectors, especially commercial, tourism and real estate. Despite the global economic slowdown, this sector is still able to achieve a margin of profit exceeding 11%, thus far from the indicators of deflation or recession. This comes at a time when the rich classes in economic crises are not affected and continue their demand for luxury products.

More than half of the world’s wealth is now dominated by 1% of the population, while passenger spending around the world accounts for 40% of the luxury goods market, with the number of travellers around the world expected to double in the next 15 years. There is, therefore, a great opportunity for the region’s markets to benefit from this expansion and from this increasing demand from new emerging classes in the region.