You have heard what they say about diamonds being a girl's best friend. But these days the sparklers seem to be a lot more than that.
As with what happened to gold and silver prices through the better part of last year, diamond values have been tracking steadily upwards since the beginning of the year, helped to a great extent by that priceless fundamental of increased demand facing limited supply. And the indications are that it will remain that way.
Since the start of the year, diamond jewellery values are up by around 35 per cent, according to Dubai based Pure Gold Jewellers, with a further 20 per cent increase expected before year end. The value gains in the second quarter were stronger compared to the first.
It is a classic case of the demand and supply mismatch. "Diamonds are a finite treasure of nature and, with future demand growth in [the] emerging markets, demand is likely to significantly outpace what is forecast to be lower levels of diamond supply for many years to come," said Lynette Gould, head of media relations at De Beers Group, historically the dominant supplier of the stones into the global marketplace.
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In the rarefied space of diamond encrusted jewellery, the Gulf markets are on the cusp of becoming a very serious player indeed. "By 2015, China, India and the Gulf are expected to equal or surpass the market share of the US (35 to 40 per cent," said Gould. "China and India have already exhibited extraordinary growth — up 25 and 31 per cent respectively in 2010.
"Both are expected to continue to post double-digit growth for the short to medium term."
That demand spurt from these two markets explains why the global marketplace was finding diamonds so hard to come by. There aren't that many of them set to emerge from the pipeline either.
"With worldwide reserves are at an all time low, diamonds are rare and getting rarer," said Gould. "There have been no new major diamond discoveries in more than a decade and no major sources of supply are scheduled to come into production in the near-term.
"Demand for diamonds has been consistently increasing for many years, and this is expected to continue in the long term, particularly as more high net-worth individuals emerge in the developing markets."
In the local trade, the price spikes have not had as much of an impact on consumer preferences for diamond jewellery as it did on gold pieces. What is changing is the buyer's recognition that diamond jewellery can represent an investment in itself, and retailers talk about shoppers who have traditionally favoured gold for festivals and occasions such as weddings now turning to diamonds.
But it is on the shoppers' mindset that the price gains have had the maximum impact.
"Customers are happy to see the increase as it assures them that diamond is an important investment vehicle and has the potential to grow," said Karim Merchant, chief executive and managing director of Pure Gold Jewellers. "If not, then at least remain the same."
"We have not seen any major changes in the buying patterns — residents and tourist alike are buying as their confidence level in jewellery as an investment is currently at an all-time high."
Pure Gold Jewellers currently sources its stone requirements from DTC, Al Rosa, BHP, Rio Tinto, all of whom have the primary access to rough diamonds directly from accredited miners. Currently, diamond jewellery comprises over 50 per cent of its sales, helped along by steady increases year-on-year.
The Joy Alukkas chain recorded a 40 per cent growth in diamonds and diamond jewellery in the last year.
"The economic slowdown and the recent rally in gold prices have forced many new customers to look closely at diamond jewellery," said John Paul Joy Alukkas, executive director. "A significant segment of customers find diamond jewellery more affordable and we have noticed an appreciable shift of customers from yellow metal to diamonds."
According to Merchant, "We are strongly promoting diamond jewellery across our retail operations in the Middle East and India; in India alone in the last eight months we have opened approximately 20 diamond jewellery stores with plans to open another ten before the end of the year. India has a huge wedding market and the new middle-class.
"China in the recent past has become an important player in the global retail market for diamond and gold jewellery and cannot be ignored by any retailer who has plans for a global presence."
Alukkas also confirmed a nascent interest in getting into China. "Having established a strong presence in India, the UK and the GCC, our future plans include a strategic entry point to capture the Chinese market."
In a nutshell lies the future direction for Dubai's retail jewellery trade. And it is anchored firmly eastwards.