Thursday night — the beginning of the weekend — and thousands have flocked to Dubai’s the Mall of the Emirates, one of the largest shopping centres in the world, to shop, eat, watch a movie or a have a few runs down the indoor ski slope.
It’s a similar story at The Dubai Mall. It attracted 54 million visitors in 2011, a 15 per cent year-on-year growth; by contrast, New York City welcomed 50.5 million visitors last year.
“People are spending more than they were last year and there is more buoyancy and confidence in the market,” said Vipen Sethi, chief executive of Landmark Group, a retail conglomerate with a presence in 17 countries across the Middle East, Africa and South Asia. Heightened consumer spending is a boon for retail banks as it would create more demand for credit — whether it be personal or car loans or credit card spending.
The buoyancy being created by the levels of consumer spending means banks can still expect to see moderate growth this year from their retail operations.
“While I can’t say specific numbers, the bottom line has been extremely positive in the first few months of the year,” said Arup Mukhopadhyay, head of consumer banking at Abu Dhabi Commercial Bank. Shopping has always been at the heart of life for Dubai’s expatriate community, given the heady cocktail of tax-free salaries, the presence of a large number of outlets to spend that cash and the fact it’s too hot to do anything outside for at least three months of the year.
The number of shoppers has also been swelled in the last 18 months by tourists flocking to the emirate, a perceived safe-haven in a region rocked by the events of the Arab Spring. Therefore, it is no surprise that the retail sector in the UAE is booming.
“From the aggregate average of feedback from clients in the sector, I would say most retailers are growing at a rate of at least 15 per cent,” Nick Levitt, head of commercial banking UAE at HSBC, said.
This is reflected in boosted credit card spending, with the average amount spent per transaction up 15-20 per cent year-on-year in the first quarter, according to Farhad Irani, head of retail banking at Mashreq — the figure is as much as 25-30 per cent higher for foreign cardholders, he added.
And this isn’t from a low base either. “The spends here are much higher than the averages worldwide, with the average about Dh500 ($140) per ticket. In Asia, the average ticket is $22-23,” Irani said.