Details

Total sales hit $250 billion by the end of 2017

An overall assessment of economic and financial growth rates depends on the strength of economic activities and the high production of major economic sectors under all circumstances. The economies of the region have been subjected to a number of economic shocks and crises over the past years that have greatly affected different sectors, foremost among them are the real estate and financial sectors.

In its weekly report, Al Mazaya Holding said that the retail sector has contributed directly and indirectly to supporting economic activities and keeping them within acceptable growth limits through effective promotion and marketing campaigns. The diversity of demand from all segments of society, including tourists and visitors, contributed as well to give some momentum. The sector, therefore, has maintained an acceptable pace of activity in times of well and woe.

Al Mazaya report highlighted the sectors that have had the most effective impact on the financial, commercial and investment scene in the region. It said that diverse promotion and marketing campaigns are continuing, including exhibitions and conferences, positively impacting the retail sector as well as the rest of economic platforms, primarily the real estate sector, which derives its strength from a strong hotel sector.

The banking sector has played a major role in ensuring continued demand and providing individuals with the necessary credit needed to continue spending, in addition to the credit provided to small, medium and large sales outlets which also have had an impact on ensuring high levels of mobility in the transport sector. In addition, the last ten years witnessed the launch of hundreds of shops and outlets, and the construction of a large number of malls and showrooms in spite of the financial and economic fluctuations that continue to affect the pace of economic activity as a whole and the growth rates achieved and targeted in particular.

Al Mazaya pointed out that the role played by the retail sector in providing the needed incentives and activation plans for production and service sectors cannot be overlooked.

The report added that the current data shows that the total value of the retail sales reached more than $250 billion at the end of 2017, and they are expected to grow by 15% at the end of 2018.

Within this context, Al Mazaya report said that the region boasts a conducive environment for foreign investment, given the high purchasing power of the public, with diversification among consumers in retail markets in the region increasing. Low costumes tariffs on imported goods play a role in this regard as well, said the report.

The report added that the industry data indicates that there has been a significant expansion and diversification in the region’s markets. The retail space delivered in Bahrain has reached 78,000 square metres and it is expected to reach 93,000 square metres by the end of this year, with the Government of Bahrain seeking to attract more investors and diversify the real estate market, given that the retail platform is one of the sectors that catalyzes and develops the real estate sector in Bahrain and contributes to generating more spaces that ensure a stable rental market.

In the Kingdom of Saudi Arabia, the retail sector has achieved an average annual growth rate of more than 10% over the past decade, with the sector employing about 1.5 million workers, while the transformation plan in the sector targets an 80% increase in the level of e-commerce by the year 2020 compared to the current level where traditional retail trade accounts for 50%, against 20% in neighbouring retail markets.

Al Mazaya said that the UAE retail markets have relied on effective plans to stay on the top. Developers are constantly bringing new opportunities and creating innovative ideas for shoppers, given the fact that competition levels are constantly rising regionally and globally.

The UAE retail sector will see approximately 2 million square metres of rental space delivered by 2019, while Dubai alone will witness 717,000 square metres of retail space in 2018, followed by Abu Dhabi with 460,000 square metres – impressive figures that reflect increasing demand levels over the coming years.

Al Mazaya pointed out that there is close connectivity between the expansion in real estate activities in cities and residential neighbourhoods on the one hand and the demand and expansion required in the retail sector on the other hand. The report noted in this regard the continuing construction of cities and residential, commercial, and industrial complexes, which means that the market is set for further expansion.

On the other hand, the current and targeted level of expansion depends heavily on the development and completion of the infrastructure facilities and projects being implemented. In addition, the e-commerce market has been growing and witnessed more expansion in the region over the recent years. The e-commerce market accounted for 3% of the total retail market in the Gulf countries by the end of 2017, compared to 20% in China and 17% in the UK.

Al Mazaya report concluded that the retail sector has the potential to contribute to stimulating other economic sectors, with the region’s markets set to expand significantly and create more of large and specialised shopping malls to meet the growing global demand and increasing tourist arrivals. In a sign of more growth, the region currently expects the completion of shopping centres dubbed as some of the largest in the world, which will facilitate the movement of goods locally and regionally, and develop effective regulations conducive to governing the sector.