DUBAI (Reuters) - Dubai is still seen as the luxury capital of the Middle East, despite its financial troubles, as retail sales in the emirate start to recover after steep declines during a turbulent 2009, retailers said.
Retailers in Dubai, known for its opulent hotels and large shopping malls packed with top global brands, saw a 45 percent drop in sales last year according to industry estimates.
But many retailers say the sector turned the corner in the first quarter of 2010.
Ramesh Prabhakar, managing partner at Dubai’s Rivoli Group in which Swatch Group UHR.VX owns a stake, said he expected 2010 to be significantly better than last year.
“We are going to see an excess of luxury retailers and brands come in,” he said. “The UAE (United Arab Emirates) still brings in the majority of the numbers.”
“We are looking at 15-20 percent increase in sales in 2010 versus last year,” he said.
Rivoli has around 300 stores in the lower Gulf area and is one of the largest retailers of luxury brands in the region. It sells watch brands such as Omega, Tag Heuer Tissot and Boss.
Dubai’s retail sector, which generates a third of Dubai’s gross domestic product, was hard hit as the financial crisis crimped consumer spending and the number of tourists to the emirate fell.
A survey of the global retail market in 2009 by consultancy CB Richard Ellis ranked showed Dubai second attracting 55 percent of retailers, just behind London on 56 percent. Paris and New York ranked third and fourth respectively.
Mohammed al-Fahim, chief executive of Al Fahim Holdings, said he did not see candidates rivaling Dubai’s position as the luxury capital of the Middle East, despite large expansions of retail space in countries such as Saudi Arabia and Qatar.
Total shopping mall supply in Qatari capital Doha is estimated to grow by 100 percent between the first quarter of 2009 and the fourth-quarter of 2010, a report by real estate consultant Colliers showed.
“What Dubai wanted to achieve is to be a sort of elite, the diamond of the Middle East and a world example,” said Lorens Ziller, partner at Elisabetta Gucci Hotels & Resorts, which is planning to open its first luxury boutique hotel in the emirate.
“There is nothing you can compare to Dubai, not yet,” Ziller told the Reuters Global Summit in Dubai.
For Italian fashion house Cerruti, which generates 5-10 percent of total sales from the Middle East, Dubai is key.
“In the Middle East, there are more traditional areas like Qatar and Abu Dhabi where it will take longer to develop a culture like in Dubai, open to tourism,” the company’s chief executive Florent Perrichon told the Reuters Summit in Milan.
Some global luxury brands, including Italy’s Valentino, are eyeing growth in the Middle East.
“In 2010 it (the Middle East) is becoming a major area of development,” Chief Executive Stefano Sassi told the Reuters Summit in Milan. “The Middle East is our number two target market after China.”
The company has around 7-8 shops in the region, including Dubai and Riyadh.
Anan Fakhreddin, chief executive of UAE jeweler Damas DAMAS.DI, sees Dubai as the luxury capital not only for the Middle East but also Central Asia, with solid consumer demand from areas such as India, Russia.
“You have so many mature luxury brands that are only present in Dubai,” he said. “Almost every company that has a philosophy of having one boutique or shop in the region has one in Dubai.”
It is very common for a large Saudi family to fly to Dubai to purchase luxury items for a wedding, he said.
Additional reporting by Antonella Ciancio; Editing by Erica Billingham