UAE retail sales forecast to expand 13% to $58 billion by the end of 2021

Business Bureau, Gulf Today

Retail sales in the UAE are expected to rebound and grow by 13% to reach $58 billion by the end of 2021, supported by pent up consumer demand in the second half of the year, COVID-19 vaccination efforts and Expo 2020 Dubai, new analysis from Dubai Chamber of Commerce and Industry has projected.

 The analysis, based on recent data from Euromonitor, predicted that UAE retail sales are forecast to maintain 6.6% annual growth in the medium term to reach $70.5 billion by 2025, with store-based retailing growth forecast at a CAGR of 5.7%, while non-store retailing is forecast to grow at a CAGR of 14.8%.

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 110,000 square metres (sqm) of retail gross leasable area (GLA) 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 added that 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.

Meanwhile, Dubai Chamber of Commerce and Industry recently concluded its latest series of the Global Business Forum (GBF) virtual roadshows, which examined the business landscape in emerging markets across the ASEAN region.

Several high-level focus groups were organised as part of the roadshows over the last six months, which were joined by prominent businessmen, trade officials and other stakeholders from a wide range of economic sectors.

During the roadshows, discussions highlighted key trends reshaping ASEAN economies post-COVID, including digitalization and the rise of e-commerce, the shift to working from home and flexible working hours, the development of manufacturing sector, as well as participants shared topics to discuss at the inaugural GBF ASEAN, including food security, agriculture, trade, investment, logistics, energy and knowledge economy.

According to the participants, Singapore and Dubai share many synergies as strategic trade and business hubs for their respective region. The two economies continue to diversify and invest in developing new sectors and capabilities. Serving as a preferred trade and investment hub for many companies in Southeast Asia, Dubai’s strategic geographic position can help ASEAN expand their global footprint across the Middle East and Africa.

Participants also mentioned that Covid-19 brought ASEAN governments together to cooperate and it will provide the framework for future trade development, adding that the private sector needs to align with the government priorities as well. In Singapore, for example, sustainability and digitalisation are the government’s priorities and there are vast opportunities to co-innovate between the two sectors.

Indonesia sees opportunities in carbon markets, participants noted, while Philippines is seeking opportunities in investing in agriculture, energy supply partnerships, investing in power projects, food security, healthcare and infrastructure development. Meanwhile, Cambodia is looking to attract foreign investment in its agriculture sector as it offers incentives such as import duty exemptions and tax windows.

In addition, attendees said that the Regional Comprehensive Economic Partnership (RCEP) is an exciting opportunity as it brings together 30% of the global economy and a huge population, adding that the partnership can address pressing challenges such as infrastructure development, public sector efficiency, education gap and healthcare delivery.

Hassan Al Hashemi, Vice President of International Relations at Dubai Chamber, said that the Global Business Forum ASEAN Virtual Roadshow is the latest in a series of efforts laying the groundwork for a world-class forum in 2021. Last year, Dubai Chamber hosted a diplomatic briefing, which created awareness about the forum and garnered support among ambassadors and consul generals, he explained.