Dubai shopping spree stalls, retailers tighten belts

By Amran Abocar

DUBAI (Reuters) - Some big Dubai retailers, accustomed to giddy spending in the Gulf Arab tax-free haven, are grappling with a drop in sales as consumers worry about the impact of the global financial crisis on their wallets.

The Gulf has not been as heavily hit by the credit crisis as Europe and the U.S., but the contagion has led to stock market routs, tight lending conditions and a range of government and central bank attempts to mitigate its impact.

In the United Arab Emirates, home to the glitzy financial hub of Dubai where shopping is virtually a national sport, a frisson of fear has seeped into consumers' minds.

"Business is 20 percent down in the last week in retail," Mohi-din Bin Hendi, president of Bin Hendi Enterprises, told Reuters.

"In the beginning, people did not take it seriously. When they start to get their ATM cards refused from the bank, that's when sense come back ... that this is serious."

Bin Hendi, whose retail-based conglomerate operates in the Gulf Arab region and India and offers everything from jewelry to sofas, said the firm would take steps to ready for a further decline in consumer spending and would "cut the desirables, go to the essentials."

Asked whether he would cut jobs, he said: "Absolutely. We have not come to a figure as yet."

"People with wise moves won't suffer as much as those who think this is only a cloudy day and it'll clear up tomorrow. It won't clear up tomorrow that easily.

"We have to sit tight, cut down our costs and be smart."

Dubai consumers have begun to see uncomfortable signs on the crisis' toll on the city, long known for spending excesses.

Companies are quietly shedding jobs or not hiring, according to recruiters, while the Arab world's biggest listed developer, Emaar Properties EMAR.DU recently gave buyers more time to pay for new homes given difficulties in obtaining mortgages.

The UAE's biggest bank has stopped lending to foreigners who work for top Dubai property firms on fears a slowdown could jeopardize their jobs and income and an Islamic mortgage lender, Amlak AMLK.DU, has suspended new loans altogether for now.

LESS SPENDING PER PERSON

"There is less footfall in the stores, people are tightening their belts," said a retail manager who declined to be identified. "It's never been like this before."

The global financial meltdown came just as the world's biggest mall opened in Dubai and nearly each week has seen the announcement of one lavish retail exercise after another.