Dubai retailers optimistic after spending slump
Dubai, December 1, 2010
Bin Hendi Enterprises, the seller of Porsche designs, Gianfranco Ferre and Hugo Boss in the United Arab Emirates, is starting to see shoppers in its stores again as the country recovers from the burst of its property and asset bubble.
The country's biggest retailer is predicting sales growth of 3 to 4 percent this year after the Middle East's shopping hub saw retail sales drop by nearly a half in 2009.
"During the heydays we were spoiled. We wanted 100 percent profits and 100 percent returns," Mohi-din Bin Hendi, president of Bin Hendi Enterprises, said. "If we the retailers have survived until now, we will also survive the coming years."
"Food is consistent in sales, fashion could go high and low," said Bin Hendi, who also operates numerous restaurants across the emirates. "We still are in good shape."
Dubai, the most ambitious and glamorous of the seven emirates, saw property prices triple in just a few years while restaurants were full with diners ready to spend their tax-free incomes. That ended as property prices plunged 60 percent from a 2008 peak and restaurants struggled to fill tables.
There are signs that Dubai's economy is picking up, with the government recently announcing growth of 2.3 percent in the first half of 2010 but concerns about the health of Dubai's state-linked companies remain as they have more than $100 billion in debt.
Al-Futtaim, another major UAE retailer that sells everything from jewellery to Toyotas, sees retail growth of at least five percent in 2010.
"We are going to see steady growth in the UAE market place this year, but it will improve at the back-end of next year," said Al-Futtaim chief executive Robert Willett.
"There are obviously better pockets, like the auto business, the automotive parts particularly, financial services, construction, will do well."
Data release last month confirmed that business conditions as a whole in the Gulf country was picking up, with the HSBC UAE Purchasing Managers' Index (PMI) tracking private sector business activity reaching a 15-month high.
"This is encouraging reading that supports our view that the UAE has shifted into recovery mode," said Simon Williams, chief economist for Mena at HSBC Bank in Dubai, adding that the level of spare capacity in the economy was "worryingly high".
Bin Hendi was correspondingly cautious, saying that it would take more evidence of a robust recovery to begin expanding his franchise again, despite coming off of strong sales during November's Eid al-Adha holiday.
"We have stopped our expansion plans because we need to concentrate on what we have. Small expansions here and there yes, but we have put a hold to significant expansion plans outside the UAE and other countries." - Reuters