Dubai: Holiday trips and staycation deals entered into by UAE residents will have a big say in how other key sectors such as retail and F&B fare during the extended Eid break.
For Dubai residents, there is also one other factor - rents- that will have a say in consumer spending during this crucial shopping period. Ever since the updated RERA Rental Index took effect from April 1, resident-tenants who have rental leases up for renewal have been taking ‘drastic’ steps to manage their budgets ahead of the revised demands from landlords, industry sources say. The local market has already recorded subtle changes in spending patterns during the just concluded Ramadan period. While spending on essentials such as grocery ticked higher - helped by the UAE authorities ensuring prices of key commodities remained unchanged - there was less on more discretionary items such as clothing, accessories, etc.
Banking industry sources say that there are seeing their retail customers paying close attention to clearing dues where possible, run up less heavy spends on their credit cards, and generate more savings to take care of the imminent rent increases.
“Any resident-tenant with a lease renewal 2-3 months from now are starting to get more careful on their non-essential spends,” said a banker.
But the biggest spend diversion by UAE residents has been on overseas holidays, helped by the fact that this time it’s an extended Eid break they are getting. “More than 75 per cent of UAE consumers whom we polled said they had plans to travel more this year,” said Sandeep Ganediwalla, Partner at the consultancy Redseer.
“‘Experience seeking’ is increasingly important for consumers and travel is seen as a good way to take in and store those ‘experiences’. Also, the fact that this is a full week of holidays overlapping with schools’ term breaks means the trips can be even longer.”
Gold’s less of a priority
Since the start of April, there has been no respite for shoppers who had plans to buy gold or jewellery this Eid. Currently, gold prices are at $2,358 an ounce range, having touched $2,365 yesterday (April 9). Needless to say, these are unprecedented price levels for gold, and which will leave shoppers feeling more than a price pinch if they were to buy now.
The VAT and import duty benefits of 15% will always convince Saudi and Indian tourists to buy gold from the UAE. Whatever the price, they will still benefit.
Based on what jewellery retailers in the UAE are saying, tourists are still spending on gold buys whatever be the peak prices. “Zero VAT for tourists remains a major draw for these shoppers on their trips to Dubai,” said Anil Dhanak, Managing Director at Kanz Jewels. “For Saudi and Indian tourist buyers, the 15 per cent immediate price benefit from buying here compared to their home markets is the only reason they need.”
As for resident shoppers, there will continue to be a wait-and-watch sentiment for gold prices to slide from these lofty levels. The ‘when’ that will happen remains a question…
Tourist spending
This Eid, jewellery retailers in the UAE are not the only ones looking out for tourists. Other retail categories and those in the services industry are counting on overseas visitors engaging in some heavy spending. The hotels are full, holiday homes have been booked. and fine dining restaurants are seeing a nice flow of these spenders from overseas.
“Dubai is expecting 3.6 million passengers through the airport during the week of Eid,” said Vipin Devadas, Head of Retail Finance at Golden Fork Restaurants.
The tourists flowing in for Eid and spring vacations has surpassed pre-pandemic levels and setting records every day.
“But because of the long holiday, major spenders among UAE residents are mostly travelling outside or going on staycations. Ticket prices of major airlines have increased by almost 400 per cent during this holiday period. This long break will affect the local restaurant business to an extent.”
Others in the F&B sector are confident that the incoming tourist numbers can more than compensate for residents traveling out.
“It has come to our attention that certain tourist areas and malls are experiencing increased levels of congestion due to the Eid celebrations,” said Chef Ali Elayat, Culinary Director at Russos Pizza and part of Prime Hospitality. “This situation presents a unique opportunity for us to capitalize on the influx of tourists.
Several hotels and restaurants have already reported a surge in early bookings, particularly those in the high-end.
“By collaborating with key stakeholders in the tourism industry, we can collectively maximize the potential benefits that this period presents.”
What about actual shopping?
Certain categories such as gold and jewellery had already seen a dip in buyer demand over the final weeks of Ramadan. Sales of smartphones and electronics too are running on the slower side, according to retailer feedback.
Demand for clothing, fragrances, household appliances and furniture are steady, they add.
We already started seeing demand since last week given it’s a long holiday this year for both private and public sectors in the UAE. The surge is expected from a diverse mix of customers, residents and tourists.
“A lot of buying in these categories might already have taken place during the individual promotions run by the retailers or the online promotions,” said a senior manager with a multi-brand retail group. “And Dubai has just had the massive 3-day online sale, with discounts stretching to 90 per cent. That too could have brought forward a lot of the shopping before the Eid break.”
This year's Eid promises a surge, with an anticipated 30% uptick. The Downtown, Dubai Marina, and JBR stand as the most coveted locales for holiday homes this week, with rates crossing levels such as Dh10,000 a night.
If these next few days, visitors to malls and other destinations in the UAE can still be convinced about spending some more, retailers will be more than content with what they did during Eid.
Of course, there is also the tourists who haven’t done their bit of shopping…
