A boom in retail construction that includes more than US$28bn worth of standalone mall projects is behind strong overall forecasts for the retail industry in the GCC, according to a new report.
The report, entitled GCC Retail Construction Market 2015, was released by construction research firm Ventures Middle East Onsite in the build up to The Big 5 construction event at Dubai World Trade in November, and suggests that retail sales across the GCC will achieve a 7% CAGR growth until at least 2018.
“The growth of the retail sector has been strong and the outlook is positive. Influenced by positive economic indicators, increased purchasing power, population growth, and an influx of tourists travelling to the region, the retail sector has expanded rapidly, attracting world-leading brands that have captured the imagination of local consumers,” explained Josine Heijmans, Event Director at dmg events and The Big 5.
Despite a high compound annual growth rate, the report suggests that retail growth will be steady, reaching sales of around US$285 billion within the next three years.
In addition, while the United Arab Emirates recently retained its status as one of the top shopping destination in the world in CBRE's yearly analysis of global retail trends, How Global is the Business of Retail, the report also points out that one of the big winners in the world of retail has been Qatar.
The 2022 World Cup host has built a stable economy, characterised by high GDP and equally high retail spending, to surpass its neighbours and become the most attractive retail destination in the region, according to A.T. Kearney’s Global Retail Development Index (GRDI) 2015.
“The recent Global Retail Development Index of A.T. Kearney lists a total of six Middle East countries in the top 30 most attractive markets for development opportunities in retail. This is no coincidence, and follows a shift in priorities among GCC governments, towards the potential of non-oil sectors such as retail and tourism in pursuit of economic diversification,” said Heijmans.
In drawing on the findings of the report, Heijmans said that it is unlikely that the planned opening of new malls will have a negative effect on the market, and that population and tourism growth forecasts mean the likelihood of future retail space becoming saturated remained low.
Instead, she said that major international showpieces like The Big 5 have become the cornerstone of the building sector on account of its ability to provide insights that enable retail and other construction industries to remain sustainable.