Luxury spend of ultra-rich people in Middle East remains strong

People walk through Dubai Mall. The UAE has retained its status as the No 1 luxury shopping destination in the region.

Wealthy consumers in the Middle East show a stronger propensity for luxury automobiles and collectables than the global average, a study revealed.
The luxury spending index produced by Wealth-X reveals that spend by ultra high net worth individuals, or UHNWIs, in the Middle East on classic cars continues to top the league of luxury goods by surging 17 per cent.
Contemporary and modern art performed particularly strongly this year, with Picasso's Women of Algiers setting an all-time auction high of $179 million.
"Despite uncertainties in economic conditions, the appetite for wealthy collectors remains robust as individuals turn to tangible investments such as paintings, which are likely to appreciate in value as opposed to other investments," said Dana Salbak, head of Mena research at Knight Frank.
"Both automobiles and collectables are a way of illustrating status and appeal to a rapidly growing and young population," Salbak added.
"As individuals in emerging markets become wealthier, we expect to see the numbers of collectors increase. Not only do collectables represent a safe asset investment, they are a way of illustrating status and a sense of having 'arrived'. Last year, the world's top 200 art collectors came from 36 countries, compared with 17 in 1990," said Salbak.
According to Patrick Chalhoub, joint chief executive officer of Chalhoub Group, consumers in the UAE have evolved, especially in the way that they are shopping for luxury items.
"Consumers today still want to purchase and own luxury products, but they are increasingly doing so for themselves, rather than to make a statement for the others around them. They are focusing more on their inner satisfaction," Chalhoub said.
"Another evolving trend that we noticed in customers in the region is that they want to experience more unique luxury. It's not just about a product or its price; today more than ever, it's about the experience. About how pleasant the shopping experience was; about how much of a connection I have formed with a certain brand; and the satisfaction I get from having a good time at the store every time I visit," said Chalhoub.
According to an analysis by the Dubai Chamber of Commerce and Industry, the UAE's retail sector is expected to reach Dh200 billion by 2017, growing by five per cent on average each year.
"There is growth of wealthy and ultra-rich consumers, the main potential customers of the luxury segment. All in all, consumption is going up and retailing in the UAE is a major sector, which is supportive of economic growth and offers a lot of business opportunities," the Chamber report said.
New research shows that the region's consumer went full speed ahead with their spending on luxury goods in 2015 despite global economic uncertainties and a drop in oil price,
A recent survey commissioned by American Express Middle East across five GCC countries reveals that the UAE retains its status as the No 1 luxury shopping destination in the region, although there was a noticeable shift in spending habits.
Among cities, Dubai was the top choice by respondents in all countries and of all age groups, while Abu Dhabi was also popular with the older age groups (35 years old and above).
According to the survey, 43 per cent chose Dubai as their favourite city to shop for luxury items, followed by Doha, Abu Dhabi and Kuwait City. The survey was conducted by GfK and involved high-income households in the UAE, Oman, Bahrain, Qatar and Kuwait.
The findings show that UAE residents spend almost Dh8,500 per month on luxury goods, placing Emirates second in luxury spending behind Qatar, where that figure is estimated to be Dh14,865.
Residents in the other five GCC countries continue to spend on luxuries and in the UAE, around eight per cent of the monthly household income of those surveyed is spent on the good things in life.
- issacjohn@khaleejtimes.com

Issac John

issacjohn@khaleejtimes.com