JEDDAH – The mood among Middle East retailers and local franchisees has been “overwhelmingly positive” in 2012, a new report by CB Richard Ellis showed. CBRE said most retailers in the region have reported increased sales turnover and the outlook for consumer demand appears to be “highly promising”. The report noted that retailers will find yet more potential for further expansion in Saudi Arabia, with major new shopping center projects under construction in Riyadh and Jeddah. European retailers favor the Middle East when moving outside their home region, accounting for four of their top five target markets. Dubai is the most popular destination with 60.1 percent having a presence there, followed by Istanbul (48.6 percent), Kuwait City (44.3 percent), Riyadh (44.3 percent) and Jeddah (42.1 percent). Asia is also a significant target, with Singapore, Beijing, Shanghai and Hong Kong all top 10 target destinations. European retailers such as H&M and the Inditex Group have been growing their networks in both these regions. The biggest driver in the globalization of the retail sector is the growth of e-commerce and this is set to play an even more important role in shaping the demand for retail real estate in future. Whilst it will be many years before e-commerce finds its ultimate place within the business of retail, the high incidence of multichannel retailing in the world's most advanced retail markets suggests that a physical store presence will remain an essential part of the equation for the most successful global retailers. The report also said tourist numbers are also up across the region, with a particular buzz around the UAE. CBRE's view backs up similar comments made by rating agency Fitch earlier this week in which it said Dubai's prime retail and hospitality sectors have performed well this year and are well placed for 2013. CBRE said the major problem facing retailers in the Middle East at present was “securing sufficient trading space to accommodate the new brands being signed up by the franchisees as well as their aggressive expansion of existing brands”. “As a result, many of the major regional players are flexing their muscles to push into established shopping centers during lease renewal periods, while also targeting up-and-coming retail markets such as Oman and Qatar,” CBRE added. The report said an important issue for local franchisees will be dealing with the growing impact of the internet. In the UAE, CBRE said much of the scope for expansion was occurring in Abu Dhabi with little new shopping center space coming on stream in Dubai. CBRE said the market continues to be a major focus for US retailers with several names, including Abercrombie & Fitch, rumored to be planning entry. The biggest US retailing group, Walmart, is also among those looking to develop a presence in the UAE market, in this case using the George sub-brand of its UK subsidiary Asda. – SG
