Growth in expat wealth, economy to lift retail sales
Stronger economic growth, increased expatriate wealth, higher household consumption and urbanization will push up retail sales in the UAE by 30 per cent over the next four years to Dh97 billion, according to the latest on the country’s retail sector.
Business Monitor International projected that the UAE country’s retail sales will grow from Dh75.05 billion in 2010 to Dh97 billion 2014 mainly in over-the-counter pharmaceuticals, automotive sales and food sales.
While Emiratis contribute to retail sales, the buying power of the country’s expatriate residents is the major source of success, according to a study by Indian research firm RNCOS.
Retail sub-sectors predicted by BMI to show strong growth over the forecast period include over the counter (OTC) pharmaceuticals, with sales expected to increase by nearly 49 per cent to $420 million (Dh 1.541 billion) by 2014 from $280 million in 2010.
With the luxury car market in the UAE growing on the back of rising levels of disposable income, automotive sales are forecast to rise by nearly 34 per cent to $15.45 billion by 2014 from $11.56 billion in 2010.
Sales of consumer electronics are expected to increase from $3.07 billion in 2010 to $3.91 billion by 2014, a rise of more than 27 per cent.
The UAE’s consumer electronics market is one of the largest in the Gulf, accounting for close to 40% of regional spending and serving a potential market of almost 2bn people across Asia and the Middle East.
Food sales, worth an estimated $7.13 billion in 2010, are forecast to increase by 18.4 per cent to $8.44bn by 2014. The UAE’s mass grocery retail (MGR) sector is one of the Gulf region’s largest by value, with sales forecast at $4.92 billion in 2010 and accounting for 69 per cent of the total food and drink market. The value of the UAE’s MGR sector is forecast to rise to $6.92bn by 2014, when it should account for 82 per cent of the overall food and drink market.
Retail sales for our set of Middle East and Africa (MEA) countries in 2010 are predicted to amount to $183.52 billion, based on the varying national definitions. Total consumer spending for the region based on
BMI attributed strong underlying economic growth (despite the recent problems in Dubai), increasing household consumption, growing acceptance of modern retailing concepts and expatriate wealth to the sector’s growth.
Growing urbanisation is another factor in the buoyancy of the retail sector. Abu Dhabi in particular is highly urbanised, with the Urban Planning Council (UPC) projecting that Abu Dhabi City’s population will rise to 1.3 million by 2013.
BMI, however, predicted that the UAE’s share in MEA retail sales is expected to shrink to 10.1 per cent by 2014 from currently 10.3 per cent.
The UAE’s nominal GDP in 2010 is predicted to be $286.75bn, with 2009’s three per cent decline expected to turn into growth of five per cent in 2010 as the economy begins to recover. BMI predicts average annual GDP growth of 4.1% between 2010 and 2014. With the population increasing from an expected 4.7 million in 2010 to an estimated 5.1 million by 2014, GDP per capita is forecast to rise by the end of the forecast period to US$72,631.
Average household spending power in the UAE stands at $14,400 per annum. Emirati households account for the lion’s share of this spending, with an average of $23,000, while Western, other Arab and Asian households have annual spending power of $19,500, $13,500 and $10,000 respectively, according to property consultants Colliers International
Follow Emirates 24|7 on Google News.