Rising household consumption and a booming service industry have driven the retail sector’s growth and enticed large foreign companies to invest in the UAE, US-based RNCOS said.

“Sophisticated retail infrastructure base and oil-based wealth have further attracted foreign retailers towards the country. This is not only boosting the retail environment in the country but also generating immense employment opportunities for the country’s population,” RNCOS said this week in a research report.

The report is in line with an earlier study that property firm CB Richard Ellis made in April, which found that 45 per cent of all major international retailers had a presence in the UAE in 2008, up from 39 per cent in 2007.

Although the recession has dented sales for the country’s stores, restaurants and other retail outlets, the country’s retail sector is on course to achieve an annual growth rate of 12 per cent from 2009 to 2013,                                               RNCOS claimed.

RNCOS said that the UAE is the fourth most attractive destination for retail companies after India, Russia and China, thanks to its rapid economic growth, rising purchasing power, favourable policy framework, and growing consumer spending.

“Also, the modern shopping malls anchoring state-of-the-art hypermarkets and various shopping events like Dubai Shopping Festival make the country a more lucrative destination for retail industry,” the report said.

RNCOS identified Saudi Arabia and the UAE as the most dynamic retail markets in the Middle East. “These two markets have continued dominating the retail industry landscape for more than a decade and will continue to do the same in the coming years,” it said. “The presence of (a) large expatriate population and (the) majority of the region’s retail investment in these countries have helped to maintain the growth momentum.”

The report noted that the Middle East was witnessing a rapid transformation in its retail industry. Retail culture across the region has evolved from traditional outlets to large shopping malls, hypermarkets, supermarkets and organised chains.

RNCOS valued the Middle East retail industry at more than $400 billion as of the end of 2008. The financial crisis would have a marginal effect of on the regional retail market, but strong economic fundamentals and a well-protected banking system would shield the region from the recession, it said.

“Although the declining oil prices may be a cause for concern for most of the oil exporting countries, it will be short-lived, as improving economic conditions and increasing fuel consumption will drive the oil                                prices upwards.”

issacjohn@khaleejtimes.com