Business | Retail

UAE businesses fast-track plans for Saudi presence

GCC firms attracted by robust retail sector

  • By Manoj Nair, Associate Editor
  • Published: 12:26 September 3, 2012
  • Gulf News

Saudi women shop at Al Hayatt Mall in Riyadh
  • Image Credit: Reuters
  • Saudi women shop at Al Hayatt Mall in Riyadh.

Dubai: For UAE and GCC business houses all roads are currently leading to Saudi Arabia as they bid to pursue the many untapped opportunities in the Gulf’s largest economy. It is a process that will speed up further with the gradual easing up of licensing requirements and the kingdom’s stated intention to bring in more overseas investments.

This means GCC businesses will not feel under pressure to go in with a Saudi partner if they decide that is not the best option.

“Saudi authorities have been emphasising that a GCC-owned venture will be treated on par with a local company and that’s an ideal situation for a regional business,” said Peter Walichnowski, CEO at Majid Al Futtaim (MAF) Properties, who developed Mall of the Emirates and has a wide regional footprint. So far the company has not made an entry into Saudi Arabia, though that could change in the near term, the CEO added.

“We have had discussions with several landowners in the kingdom for our requirements to develop a sprawling mall and leisure destination. I don’t think we have missed the boat – despite all the new malls being created in Saudi Arabia, there’s still plenty of room for a MAF-type super-regional destination mall.”

On the real estate development side, Emaar and Damac Properties are already represented in the kingdom. But it is the retail and service sectors that are garnering a lot of the recent attention from GCC business groups, and instances include AW Rostamani Trading setting up showrooms for the Chinese-made ZNA brand and Dubai-based Sun & Sand acquiring more than 20 outlets in Saudi Arabia to sell sports equipment as part of a major expansion drive.

According to Euromonitor International, “2011 saw the Saudi economy return to stronger growth... consumers became more willing to make impulse purchases as a result of this greater sense of affluence, which benefited sales across retailing.”

These parameters are at work this year as well, no doubt helped by oil prices hovering well above the $90 a barrel mark.

Industry sources suggest that the reforms Saudi Arabia has been pushing for are starting to be felt where it matters. Regulatory and licensing approval processes are definitely faster than they used to be. Also, where needed businesses could still look at joint ventures.

Recently, Cravia Holding, a diversified group with extensive interests in the F&B space, aligned with Al Rajhi Group to jointly tap opportunities in the kingdom.

“The purpose of the joint venture is not so much legal as it is strategic,” said Walid Hajj, CEO of Cravia Holding. “We could have done full investment without another partner. However, we feel this will add value in the long term and help build a better business going forward.”

Nothing matters more to a business group entering a new market than having the flexibility to operate. Saudi Arabia, where changes have in the past been termed incremental and time consuming, is now offering businesses just that.

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