Dubai: Is luxury going to lead the revival?
Whether in retail or real estate, the UAE’s wealthy are making their presence felt… once again. In recent weeks, they have put their signatures to pick up super-premium cars, signed contracts for plots to build Dh30 million plus “mansions”, or just walked into jewellery showrooms to pick up Dh100,000 plus designer pieces. For others, it’s ordering costliest fragrances in town.
Clearly, these buyers are not into off-the-shelf purchases.
“It’s all about sentiment – there’s this impression gaining ground that the worst of the COVID-19’s impact on the economy has been dealt with,” said a private banker. “Or they feel they have put in enough buffers into their business to absorb the virus’ impact.
“The number of plus Dh20 million property transactions being planned is quite significant – many of these deals have already been signed. The updated 10-year ‘golden visa’ rules is creating a lot of interest, and we should see some of that reflected in bigger real estate transactions.
“Locations such as District 1 in MBR (Mohammed Bin Rashid) City are picking much of that interest.”
There are also some good "bargains" available, as one buyer of an Emirates Hills villa said after getting it for under Dh20 million.
Art of the deal
For Dhananjay Datar, Chairman and Managing Director of ethnic foods retailer Al Adil Trading, it’s all in the timing. “Across all retail categories, there are deals on offer to suit all sorts of wishes and budgets. The car market is no different.”
Datar has just added another premium model to his garage – this time in the form of that all-power Mercedes-Benz G63. He paid upwards of Dh800,000 on the model, which, naturally, comes with all the bells-and-whistles in terms of options on board.
As to why he didn’t decide on another Rolls-Royce, which has been his preferred brand through the years, Datar said: “It’s a time to think differently… even when it comes to cars.”
Sure, the wider new car sales market is still suffering, but you would hardly notice anything of that sentiment at the top end of this category. One dealership is charging around Dh100,000 extra for instant delivery of a much-in-demand model. Otherwise, the buyer would have to have wait a few weeks to get behind the wheels.
Some are tempted to pay up the extra. “When it comes to something being in demand, there’s always someone willing to pay more,” said one prospective buyer.
Recipe for recovery
Market sources are now looking to the top end of the market to show signs of stabilizing, which will then filter down to the lower levels. There are other potential positives that could show up.
Saudi Arabia’s revised 15 per cent VAT – from July last - gives the UAE a pricing advantage, which will materialize once travel opens up with COVID-19 vaccines becoming easily available.
“The Saudi VAT can benefit brick-and-mortar retailers in the UAE – each time a Saudi visitor comes, there’s the prospect of winning some major purchases,” said the CEO of a leading retail group. “That this hasn’t happened to date was only because of COVID-19 and all the restrictions on travel.
“UAE’s brick-and-mortar retail will be the biggest winner, especially at the top end of the market. In fact, it could speed up the recovery.”
But digital will play a part in connecting with buyers, even in such tradition-bound categories such as fragrances where in-store was seen as the only way to sell.
“We are now pivoting our efforts to offer high-end digital experiences to new and existing customers,” said Asghar Adam Ali, Chairman of Nabeel Perfumes Group.
Keep in mind that his portfolio includes the ‘Shumukh’, billed as the “world’s most expensive perfume” and priced at an eye-popping Dh4.75 million.
“Perfumes being a non-essential commodity saw an overall decline in retail and export sales during the pandemic,” said Ali. “Our premium brands - ‘Nabeel’ and ‘Chris Adams’ were affected, but saw encouraging signs of recovery in fourth quarter.
“Our ultra-niche brand – ‘The Spirit Of Dubai - which retails from Dh885 to Dh18,995 performed considerably better, and we continued to grow our distribution network worldwide. There was a major upward trend in our ecommerce business, which grew 119 per cent over 2019. That’s remarkable for any niche luxury brand in such challenging times.”
The rich shopper, clearly, is not going to let a pandemic get in the way of picking up his wants.
For proof, UAE’s gold and jewellery business can provide many such instances in recent weeks. “There was a walk-in customer who picked up a Dh100,000 plus jewellery in a matter of minutes,” said Cyriac Varghese, General Manager at Sky. “It was by far the costliest piece we sold in 2020 – a year that had only extreme difficulties to offer the gold trade.
“If we had more buyers like this individual, a recovery in 2021 would be that much easier.”
He isn’t the only one having such thoughts...