Luxury sector in region climbs up growth ladder

Sunaina Rana / Emirates Business

The luxury sector in the Middle East continues to grow undeterred by
any economic hurdles. It has been ranked among the top 10 luxury markets globally, with a spending of around AED34 billion in 2015.
The overall industry — as tracked by Bain & Company — comprises 10 segments, led by luxury cars, luxury hospitality and personal luxury goods, which together account for 80% of the total market. The industry surpassed €1 trillion in retail sales value in 2015 and delivered a healthy growth of 5% year over year (at constant exchange rates). This growth was driven primarily by luxury cars (8%), luxury hospitality (7%) and fine arts (6%), according to the Luxury Goods Worldwide Market Study by Bain & Company.
With growing private wealth in the GCC reaching a cumulative USD 2.2 trillion, according to the most recent statistics, the inclination of the regions buyers is to shift their focus from product to value.
Mario Peserico, General Manager, Eberhard, told Emirates Business, “We believe this is a very good moment for niche brands like Eberhard, particularly in mature markets that at the moment are suffering from an uncertain economic scenario and more than ever look out for reassuring products that retain their value over time. In spite of many difficulties, we feel confident that the luxury watch business will continue to grow in the future.”
He added, “We all know that we are moving in a very complex international scenario, due to both economic and political setbacks that are due to affect the consumers’ confidence, at least in the short term. Nevertheless, our industry has been prospering for many decades, particularly since the second half of the last century, and has been able to survive many negative situations and events like wars and several economic crises.” “The market for luxury products is not dissolving, but evolving,” says Erwin Bamps, CEO of Gulf Craft, one of the world’s leading superyacht shipyards. “So the question is not where the money is going, but rather how customers are choosing to spend it.”
“Today’s customers are more value-conscious, better educated, and more informed than ever. They do their research before coming to us. This means that their expectations are higher, and we have an
opportunity to achieve greater customer satisfaction because we have a clearer understanding of their requirements,” Bamps added. Similarly, Cluttons’ 2016 Middle East Private Capital Survey indicated that real estate continues to be a preferred investment route for the GCC’s high net worth individuals. About 63 per cent of HNWIs from the Arabian Gulf plan to invest in locations such as Dubai, Abu Dhabi, and Sharjah, according to the survey, which was conducted in partnership with YouGov. “Yes, the world is facing economic challenges, but with every challenge comes an opportunity,” said Cesar Latrilla, CEO of Engel & Völkers Dubai, a service company specialized in the brokerage of high-end real estate and yachts.
“Despite the current slowdown in the general market sentiment in Europe and the US and also in China, all indications are that this should not affect the overall positive trend in the market.
“Additionally the GCC countries too continue to be significant players in the current scenario, even though the current squeeze in the price of oil is expected to impact regional markets adversely,” said Karim Gerber, Manager, Middle East Region, of luxury watch brand Oris.