Luxury goods retail sales in the Middle East and Africa (MEA) are expected to remain strong, growing at a CAGR of 7.2% during the forecast period. The rising middle class population, surging purchasing power, better educated young millennials, and government initiatives to boost tourism are driving growth in the region. New luxurious spaces such as the Boulevard Mall in Jeddah, Saudi Arabia and the Sandton Diamond Walk in Johannesburg, South Africa have created new high-end retail avenues for brands to expand and enter these countries. Likewise, a mega-store by the Chalhoub group in Abu Dhabi, Saudi Arabia, and the Azrieli Sarona upscale mall in Israel, are planned to open in late 2015 and 2017 respectively, which will further drive more luxury players in the region.
Key Findings
– The luxury goods market in the Middle East and Africa will experience the fastest growth worldwide, growing at a CAGR of 7.2% during 2014-2019, despite conservative shopping behavior expected from oil exporting countries, due to a fall in oil prices, and from mature markets such as the UAE
– The UAE is the largest luxury goods market in the region
– With a relatively strong economy, increasing religious tourism, favorable demographics, and surging spending by young consumers, Saudi Arabia remains the fastest growing luxury market in the region
– Personal care is the fastest growing category, benefitted by women’s aspirations and the rising sales of luxury fragrances through duty free stores
– Favorable demographics and increasing retailer activity will spur the growth of luxury goods in South Africa
– LVMH takes more than a quarter share of total luxury goods market in the region
