With their home markets still comatose following the recession, Europe's luxury brands are not missing any opportunity to expand in the Gulf, particularly in Dubai.
In fact, these luxury brands have been most active in the local retail sector, accounting for over 23 per cent of new store openings in the last year, states CB Richard Ellis' latest retail report.
Mall of the Emirates is opening a new luxury avenue - Fashion Dome on Wednesday (September 1) to cater the growing demand.
"What we're seeing is that projects such as Dubai Mall and Mall of the Emirates have had a big influence on the number of luxury brands opening in the UAE," said Matthew Jay, senior consultant at CBRE Middle East. "Most luxury brand openings have been on the back of these two projects."
Dubai already has the third highest density of luxury brands. Approximately 85 per cent of brands included in the CBRE survey can be found in the emirate.
Hong Kong has maintained its position as the most popular global destination, attracting 91 per cent of the luxury brands surveyed, closely followed by London, which attracted 87 per cent.
In line with this trend, it should then be no surprise that the new extension at the Mall of The Emirates has attracted over 40 luxury labels. They include Cartier, Canali, Boutique 1, Paul Smith, Marc by Marc Jacobs, Versace, Diane von Furstenberg, and the largest D&G boutique in the region.
"Demand is definitely there, and we've been selective with the luxury based on the sales of our current shops," Fuad Sharaf, vice-president of Mall of the Emirates told Gulf News.
"The extension will house brands between the high and middle-end of the spectrum and will serve the type of the customers who come to the Mall of the Emirates."
Existing premium retailers with a presence already in the Mall of the Emirates such as Louis Vuitton, Christian Dior and Gucci will expand to bigger premises within the Fashion Dome.
"Mall of the Emirates is one of the top malls in the world, so the new extension will do well as it's positioned to attract a number of locals, tourists and Abu Dhabi residents," said Jay.
"The extension that will house mostly high-end brands will add something that is currently lacking in the mall which currently has mostly mid-range brands."
To complement the new outlets, the Fashion Dome will serve up a number of cafes and restaurants, including More Café, the French restaurant Fauchon, the American-Chinese fusion restaurant PF Chang's, and Tribes from Africa which is making its UAE debut.
"The reason why we decided to launch this new wing is that we have seen the existing offers of food and beverage outlets in the malls and realised we can enhance it by adding some extra stores," said Sharaf. "We've been very selective with our outlets, for example, PF Chang is well liked and has proved itself at its branch in Mirdif."
According to Sharaf, consumer confidence is picking up. "In the first days of Ramadan, compared to last year, we're up by 5 per cent," he said.
"By opening Fashion Dome we are sure it will attract more customers.
"The idea is to add value to the mall which the rest of the retailers can benefit from. Our target is to maintain the average spend and sales of the mall especially after the downturn."
Just under half a billion dirhams has been invested in the new space, which was built to increase footfall and add value to the destination.
Direct impact
"We are confident the opening will have a direct impact on the footfall," said Sharaf.
"The tenant mix you will get from the high-end restaurants and stores will attract more customers. These have been chosen based on statistics on what the customers want."
This expansion shows that despite the global economic slowdown, luxury retailers continue to expand their global networks, with the new additions mainly focused on emerging markets.
Untapped avenues
Outside of Dubai, many brands are looking towards previously untapped markets for their expansion.
"Despite continued uncertainty for some retailers across the world, luxury brand retailers have remained active and were responsible for the most new store openings in the past year," said Peter Gold, head of EMEA cross-border Retail, CB Richard Ellis.
"For some retailers, difficult trading conditions in their domestic markets, saturation in their home countries, and the search for margin growth by operating in lower-cost locations, may all be factors influencing retailers' decisions to move into emerging markets.
"With marginal economic impact from the global crisis and a strong desire for luxury brands, Brazil and China are two countries rapidly rising amongst the world's most popular luxury goods markets."
