Pent up demand, vaccine to spur UAE retail sales to $58 billion in 2021
UAE retail sales are forecast to maintain 6.6 per cent annual growth in the medium term to reach $70.5 billion by 2025
Driven by pent up consumer demand and recovery from the pandemic, retail sector in the UAE is expected to rebound and grow by 13 per cent with sales reaching $58 billion by the end of 2021, Dubai Chamber of Commerce and Industry said in a forecast.
The chamber analysis has taken into consideration, apart from a revival in consumer demand, the headway made in Covid-19 vaccination efforts and the opportunities of Expo 2020 Dubai.
The analysis, based on recent data from Euromonitor, predicted that UAE retail sales are forecast to maintain 6.6 per cent annual growth in the medium term to reach $70.5 billion by 2025, with store-based retailing growth forecast at a compounded annual growth rate (CAGR) of 5.7 per cent, while non-store retailing is forecast to grow at a CAGR of 14.8 per cent.
According to market reports site Reportlinker.com, the UAE retail market that was valued at $55 billion in 2019, is projected to grow to $ 75 billion by 2025 due to various factors such as rising per capita income, growing tourism industry, increasing expatriate population and rising number of upcoming development projects in the country such as Deira Mall (Dubai), Al Maiyah Central (Abu Dhabi), Cityland Village (Dubai), Tilal Mall (Sharjah), Reem Mall (Abu Dhabi), among others. Also, major events such as the Dubai World Expo 2020, in addition to other new attractions will further boost the tourism, transportation, and manufacturing industries in the country.
GlobalData retail analysis said although Covid-19 might have wiped Dh 13.5 billion off the original 2020 forecast growth of 5.8 per cent in the UAE, its wealthy population and brief lockdown period will mean the market holds up better than many of its Mena neighbours.
Another factor supporting the retail sector bounce back is a relatively faster recovery the UAE is experiencing compared to most Western economies due to consumers' greater propensity to spend on luxury items.
Across the globe, the retail industry, currently valued at $25 trillion, will never be the same again, even with the availability of the Covid-19 vaccine, according to pundits. While vaccines might bring back normalcy in life, the retail sector will continue to evolve, due to a technology-led disruption where data analytics, artificial intelligence, machine learning, perceptive analytics, and changing consumer behaviour will reshape the retail industry landscape to strengthen customer experience.
The chamber analysis said progress related to the UAE's vaccination campaigns is expected to boost demand in the second half of this year and attract consumers and tourists back to traditional stores. "Expo 2020 Dubai, scheduled to kick off in Dubai this October, is expected to be a major catalyst for the recovery of the retail sector, in addition to the support and incentives provided by governments to business sectors at the federal and local levels."
The UAE currently leads the Middle East and North Africa region in terms of household spending on e-commerce at $2,554 per household, which is twice the value of the global average of $1,156, and four times the value of the average in the Mena region ($629).
According to JLL, Dubai saw 110,000sqm of retail gross leasable area completed in 2020, which brings the emirate's total retail stock to 4.2 million sqm.
Meanwhile, Abu Dhabi retail space stock remained unchanged at 2.8 million sqm. During 2021, Dubai is expected to see 761,000 sqm of retail GLA added to the market, while 293,000 of new retail GLA is expected in Abu Dhabi by the end of the year.
As new retail space in the UAE continues to come online in the short term, the market has become more favourable to tenants, due to expected lower rents and more available options, a trend which should support the recovery of retail businesses.
The analysis said the Covid-led digital shift has created new growth opportunities for regional expansion for traditional retail and e-commerce companies based in the UAE, especially in markets with large populations, such as Saudi Arabia, Egypt, Algeria and Morocco.
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