GCC Luxury Sector Shows Resilience Amid Economic Uncertainty
Published: Wednesday, 11 May 2016
United Arab Emirates (UAE) industry experts say that the luxury sector in Dubai is continuing to demonstrate resilience in spite of economic challenges, driven by investor recognition of the many opportunities the current market landscape presents.
Record-low oil prices have had a ripple effect on global economies, however, with growing private wealth in the Gulf Cooperation Council (GCC) – reaching a cumulative USD 2.2 trillion, according to the most recent statistics by Strategy& (formerly Booz & Company) – the propensity to spend remains buoyant in Dubai as buyers shift their focus from product to value.
“The market for luxury products is not dissolving, but evolving,” says Erwin Bamps, CEO of Gulf Craft, one of the world’s leading superyacht shipyards. “So it is not a question of where the money is going, but rather how customers are choosing to spend it.”
“Customers today are more value-conscious, better educated, and more informed than ever. They do their research before coming to us. This means that their expectations are higher, but it also means we have an opportunity to achieve greater customer satisfaction because we have a clearer understanding of their requirements,” Bamps adds.
(From left: Melanie Shubair, Marketing Manager at Engel & Völkers Dubai; Erwin Bamps, CEO of Gulf Craft; and Cesar Latrilla, CEO of Engel & Völkers Dubai)
According to the Luxury Goods Worldwide Market Study by Bain & Company, worldwide luxury spending surpassed EUR 1 trillion (more than AED 4 trillion) in 2015, with the Middle East listed among the top 10 big spenders at EUR 8.1 billion (AED 34 billion).
Similarly, Cluttons’ 2016 Middle East Private Capital Survey indicated that real estate continues to be a preferred investment route for the GCC’s high net worth individuals. About 63 per cent of HNWIs from the Arabian Gulf plan to invest in locations such as Dubai, Abu Dhabi, and Sharjah, according to the survey, which was conducted in partnership with YouGov.
“Yes, the world is facing economic challenges, but with every challenge comes an opportunity,” says Cesar Latrilla, CEO of Engel & Völkers Dubai, a service company specialised in the brokerage of high-end real estate and yachts.
“Ultra high net worth individuals understand that this could be the best time to make an investment because of the prospects presented by current market conditions – lower prices, greater value, and a higher return on investment in the long-term.”
Clients make the best ambassadors, agreed by the industry leaders, adding that the most effective approach to generating sales leads is positive word-of-mouth.
“No one can better share their journey with you than a customer who has experienced it first-hand, and this is especially true for high-investment purchases,” says Bamps. “However, this all boils down to a company’s commitment to delivering exceptional service and quality products. If you have one happy client who then shares his or her experience with another potential client, there is a strong chance this could turn into a sale. But the opposite also holds true, and that is why a company’s capacity to meet and exceed customer aspirations will ultimately determine its destiny, regardless the economic situation.”