Whether it's Prada, Burberry, Cartier, Chanel, Lexus or Tiffany, the world's luxury brand manufacturers are turning up the spotlight on the Middle East, especially in the Gulf. Demand is rising fast, with sales up by two thirds even for newcomers, such as Lindt's Belgian chocolates. But they are also facing increased competition in Arab markets from the region's own luxury makers as well as a host of young local designers trained in the US and Europe who are showcasing their own haute couture, jewellery and interior design in Dubai, Doha and Beirut following successful sales in Paris, Rome and Los Angeles.
"Luxury around the world continues to perform well, but I think this region is special," said David Macadam, regional director and head of retail at Jones Lang LaSalle. "It goes from strength to strength here. In the last recession, the challenge for some of the luxury retailers wasn't so much the lack of people buying, it was lack of product in their shops for people to purchase."
"Luxury remains a growing market in the Middle East and GCC, with substantial spending power, strong consumption habits and a consumer confidence increase," notes Fadi Jabbour, chief operating officer at Dubai's Chalhoub Group, which holds a franchise for Louis Vuitton, Prada and Christian Dior. "At a group regional level, our sales forecast for 2011 was 11% growth, but we started with a very strong beginning of the year, and it ended at around 15%."
At a time when recession is again looming in Europe and Japan, luxury brand manufacturers are looking intently at places such as China, Russia, India, Brazil and other emerging markets where individual spending power, at least among the elite and nouveau riche, is increasing markedly, as is the number of those who can afford the high prices involved. The global financial house, Standard Chartered, reports that Dubai is the second-most-attractive emerging market for retailers after China. Retail spending, it says, accounts for 30% of gross domestic product in the emirate, which is home to some 40 huge shopping malls.
Confidence remains high, retailers in the Middle East say, something that stands in marked contrast to the growing sense of gloom reported among many western middle-class consumers. The Nielsen Global Consumer Confidence Index, a benchmark respected by retailers around the world, puts India at the top of its list, followed by Saudi Arabia. The UAE is in seventh place.