Saudi Arabia on course to emerge as future luxury capital of the Middle East

Saudi Arabia on course to emerge as future luxury capital of the Middle East
Saudi Arabia stands out as a youthful market overall, where the Gen Z population stood at 8 million in 2021, whilst almost half of the total population is below 29 years old. (AN photo by Huda Bashatah)
Short Url
Updated 08 April 2023

Saudi Arabia on course to emerge as future luxury capital of the Middle East

Saudi Arabia on course to emerge as future luxury capital of the Middle East
  • Saudi luxury market size expected to reach $15.8 billion by 2028

RIYADH: As Saudi Arabia has firmly established itself as a top destination for high-end shopping, it may not be long before the Kingdom emerges as a future luxury capital of the Middle East.

With the diversification of the economy, improvement of consumers’ lifestyle, as well as high per capita income, Saudi Arabia has seen increased spending on luxury products.

Not surprisingly, global luxury brands like Gucci, Louis Vuitton and Chanel have opened flagship stores in the Kingdom while Prada, Tiffany and Mulberry have increased their presence by establishing mono-brand outlets.

According to a report by the International Market Analysis Research and Consulting Group, the Saudi luxury market size reached $8.3 billion in 2022. Looking forward, IMARC Group expects the market to reach $15.8 billion by 2028, exhibiting a compound annual growth rate of 11.6 percent during 2023-2028.

Gen Z factor

The growing demand for luxury is apparently being driven by affluent groups, such as Gen Z, female consumers and wealthy tourists.

According to Euromonitor International’s data, the Kingdom was home to 117,000 millionaires in 2022, meaning a considerable number of ultra-high-net worth-individuals. This is alongside a large Gen Z population who support the sector, as luxury shoppers around the world are getting younger.

Saudi Arabia stands out as a youthful market overall, where the Gen Z population stood at 8 million in 2021, whilst almost half of the total population is below 29 years old.

Wojciech Orlowski, country director, Saudi Arabia at Bateel International, told Arab News: “Retailers continue to adapt to changing consumer preferences and behaviors in the Kingdom, as a younger, yet demanding demographic leverages their purchasing power.

“Unique offerings boasting excellent service quality, premium and personalized experiences, and constant innovation, are winning consumers’ loyalty in Saudi Arabia.”

The increasing participation of women in the workforce and recent social changes further support consumers’ appetite for luxury, the report said, adding that the boom in tourism, in particular luxury travel, will be an asset in developing the Kingdom’s luxury market.

Malls in focus

By all accounts, the establishment of state-of-the-art malls provides luxury brands with sufficient space to broaden their operations in the region.

“Luxury malls and retailers in Saudi Arabia are providing personalized shopping experiences to attract and retain customers,” Yousef Barghouth associate director, Retail Agency, Savills, Saudi Arabia, told Arab News.

“These may include offering customized products, personalized recommendations and tailored shopping experiences.”

He added: “Luxury malls in Saudi Arabia are also enhancing the overall shopping experience by providing amenities such as valet parking, concierge services, fine dining restaurants and other experiential offerings.

“These amenities create a luxury shopping experience that encourages customers to stay longer and spend more.”

Speaking to Arab News, Hind Ali, senior consultant, Euromonitor International Dubai, said “mall culture” has been synonymous with the Gulf region and was once the main food, shopping and entertainment destination, however, today, things have changed.

Saudi Arabia is expanding its leisure, entertainment and retailing infrastructure, paving the way for a world-class consumer lifestyle, which is increasing demand for everything luxury.

Hind Ali, Senior consultant, Euromonitor International Dubai

“Saudi Arabia is expanding its leisure, entertainment and retailing infrastructure, paving the way for a world-class consumer lifestyle, which is increasing demand for everything luxury,” she explained.

While leading and established malls remain popular and attract luxury brands, she said upcoming giga-projects and mega developments are going to woo many high-end businesses across different sectors with new and different retail concepts.

Ali cited examples of VIA Riyadh, which opened in February this year, and The Mukaab, the crown jewel of the world’s largest modern downtown development planned in Riyadh.

“While VIA Riyadh is a luxurious new destination that offers elite shopping and dining outlets, a cinema and Saudi Arabia’s first St. Regis hotel, The Mukaab is promised to be the world’s first immersive, experiential destination for hospitality, retail and leisure,” she explained.

Ramadan spending

Talking of luxury spending during Ramadan, Ali said, it was a growing trend in affluent Gulf Cooperation Council countries. “Personal luxury goods such as beauty and personal care, apparel and footwear, jewelry and luxury bags are among the biggest winners,” she explained.

Ali added: “Luxury brands including offer curated capsule collections for Ramadan and promote them through campaigns that celebrate the holy month’s values and traditions. Collaborations with influencers and social media personalities are very popular during Ramadan. Perhaps the biggest collaboration this year was Laverne’s (Arabian fragrance brand) commercial with Georgina Rodriguez, Cristiano Ronaldo’s partner.”

A report by Euromonitor International, which focuses on unlimited opportunities in luxury in Saudi Arabia, highlighted the huge significance placed on celebrating local culture and heritage.

“This drive has been supported by the government but has also clearly been driven by burgeoning consumer demand, which is opening up and encouraging business opportunities,” Ali said.

She went on to cite the example of the abaya, which not too long ago was almost exclusive to Saudi women. “Today, even after lifting of legal enforcement to wear the abaya in 2018, it has grown massively in popularity among all nationalities and become a statement piece during Ramadan,” Ali said.

“We can’t help but wonder who the first luxury designer brand will be to launch their abaya line,” she continued. “This opens up many opportunities for luxury fashion brands provided this is carried out with due diligence and care as far as cultural appropriation is concerned.”

Luxury fashion

As part of a concerted campaign to promote its local heritage and capitalize on its own affluence, Saudi Arabia is also placing great emphasis on local fashion.

The Fashion Commission, established in 2020 and part of the Ministry of Culture, aims to create a thriving fashion space to promote local talent, designers and international brands, whilst encouraging long-term awareness of culture and heritage.

According to the commission’s upcoming report, Saudi Arabia has a potentially powerful opportunity to develop a high value fashion value chain in support of the realization of Vision 2030.

“Saudi’s burgeoning fashion scene has made an immediate impact at home and internationally,” Burak Cakmak, Fashion Commission CEO, told Arab News.

“The country has all the components of a fashion hub — it is strategically located at the crossroads of three continents, has a large domestic market, a rich and unique fashion heritage, and a hugely talented pipeline of local brands that are driving all aspects of the value chain.”

He added: “Luxury fashion is quickly becoming emblematic of Saudi and we are learning to harness our style superpower and building infrastructure for a high-value fashion value chain, including a new product development studio set to open in Riyadh this year.”

Shift toward e-commerce

One of the most significant trends in luxury retail is a shift towards e-commerce, as more consumers have become increasingly comfortable shopping online.

“Luxury retailers in the Kingdom are embracing e-commerce to cater to the growing demand for online shopping,” said Barghouth.

“Many luxury retailers have launched online stores to offer a seamless shopping experience to their customers.”

“Luxury retailers in Saudi Arabia are offering omnichannel experiences that integrate online and offline channels, allowing customers to seamlessly move between channels and enjoy a consistent shopping experience,” he continued.

“As consumers become increasingly comfortable and confident about shopping online, retailers will continue to invest in improving their online services and as more consumers shop online, brick-and-mortar stores will have to improve their offering to remain relevant. This could include new concepts and formats to attract customers, while they could also blend the offline and online retail worlds to provide a more comprehensive and convenient shopping experience,” added Ali.

“Heavily influenced and guided via targeted and data insight-rich strategies like digital advertising, brand awareness, social media, and other marketing channels, happy customers are those that receive the personalized VIP treatment,” Karl Crowther, regional vice president, Middle East & Africa, at Alteryx, a leading analytics automation platform, told Arab News.

“The most effective retailers today are the ones combining data-rich online touchpoints with the quality and customer experience they can deliver in-person,” he concluded.

Kuwait’s non-oil sector to grow 3.8% in 2023: IMF  

Kuwait’s non-oil sector to grow 3.8% in 2023: IMF  
Updated 06 June 2023

Kuwait’s non-oil sector to grow 3.8% in 2023: IMF  

Kuwait’s non-oil sector to grow 3.8% in 2023: IMF  

RIYADH: Kuwait’s non-oil growth is projected to increase to about 3.8 percent in 2023 on account of a robust expatriate community, the International Monetary Fund has forecast.   

While overall growth is anticipated to drop to 0.1 percent this year, the non-oil economy will be strengthened on the back of the financial stimulus and partial recovery in the employment of expatriates, according to the IMF’s latest analysis of Kuwait.

The county’s advancement will occur despite the slow growth of real credit, said the report, adding: “Benefiting from high oil production and prices, Kuwait’s economic recovery continues.” 

The report noted that Kuwait showed adequate recovery from the effects of the pandemic, and inflation has been controlled given the limited spillover from higher global food and energy prices. 

This resulted from managed prices and subsidies, as well as the general tightening of monetary policy in line with major central banks.  

Kuwait’s fiscal balance has developed since its overall fiscal surplus is expected to have increased by 22.5 percent of the gross domestic product in 2022, up from 6.4 percent in 2021.   

As for the country’s external balance, the current account surplus is estimated to have increased to 33 percent of the GDP last year, up from 26.6 percent in 2021.   

Additionally, the country’s financial stability has been preserved as its banking sector sustains an efficient level of capital and liquidity.  

Economic threats  

The instability of oil prices and production brought on by external factors pose risks to Kuwait’s external balance, public finances, growth and inflation, according to the report.   

Kuwait’s economy could also be at risk of the slowdown in global growth due to further tightening of monetary policy or pressures in the banking sectors of major advanced economies.   

The report also noted that the country is susceptible to the delay in implementing the necessary financial and structural reforms, which could lead to the continuation of the current public fiscal policy.   

In turn, this might damage investor trust, while limiting progress towards diversifying economic activity and boosting its competitiveness.  

“The dominance of oil in the economy, coupled with global decarbonization trends, necessitates fiscal reforms to reinforce sustainability, and structural reforms to boost non-oil private sector-led growth,” said the report, adding: “Political gridlock between the government and parliament has hindered reform progress, which could be made now from a position of strength.”

Dammam hosts important fish and algae conference and exhibition

Dammam hosts important fish and algae conference and exhibition
Updated 06 June 2023

Dammam hosts important fish and algae conference and exhibition

Dammam hosts important fish and algae conference and exhibition

DAMMAM: More than 100 companies from 35 countries descended on the Dhahran Expo for an under-the-sea experience during the International Conference and Exhibition of Algae from June 4-6.

The event, organized in conjunction with the International Fisheries Exhibition — known as SIMEC — played host to 16 workshops in a dedicated interactive space where seafood was offered to visitors, videos were on display, and experts were on hand to discuss everything related to algae and fish.

The exhibition was held under the patronage of the Eastern Province Gov. Prince Saud bin Nayef bin Abdul Aziz, the Ministry of Environment Water and Agriculture, and the National Livestock and Fisheries Development Program.

Abdul Majeed bin Saad Alshehri, chairman of the conference and SIMEC, said: “In this major global event, we proudly bring together global expertise and international expertise that will further advance food processing industries, develop human capacities, localize cutting-edge algae, and aquaculture technologies … I am fully confident that (IACE will) come up with tangible and actionable recommendations that will transform the algae and fisheries industries.”

The hybrid modality conference was presented in both English and Arabic — with headsets providing simultaneous translations for those requiring it. 

The aim of the three-day gathering was to target businesses from the algae sector as well as to increase awareness regarding the potential for algae cultivation. 

Another goal was to attract investors, inform government representatives of updates in the sector and engage stakeholders from the algae and aquaculture production chain. 

It was also a chance for the global community to exchange information and form potential collaborations among academic researchers working on algae biotechnology.

The main conference sponsor, NEOM, had several interactive spaces within the exhibition and hosted several workshops.

There were other forums led by experts from around the world, including local Saudi universities and companies. 

The Dhahran Expo space was also divided into booths with informative experts passing out brochures and samples of fresh seafood.

One such exhibitor was Julien Ropert, export manager from Le Gouessant in France. 

He traveled to Saudi Arabia for the first time in order to participate at the exhibition and to speak on a panel. 

With over 30 years of experience in fish feed manufacturing, Le Gouessant brought its expertise in sustainable fish farming nutrition to the space. 

Having worked for Le Gouessant since 2016, Ropert is the technical sales manager aquaculture based in France but in charge of Africa and the US. 

Saudi Arabia is a new target as they hope to expand into the Middle East.

“I came to this exhibition to see the Saudi people because I saw videos on the internet on many occasions and it’s a huge country with huge capacity and the government is increasing the sector of the efficiency of fish farming,” he told Arab News.

His hope is that he will be able to secure some partnerships within Saudi Arabia in the imminent future in relation to fish farming.

Saleh Bukhamseen, the award-winning underwater cinematographer whose short film “The Whaler” won the Science Award at the 2022 Nice International Film Festival, spoke to Arab News about the importance of algae in the region. 

“We are here at the exhibition to show the people how important algae is and and how it’s important for the whole ecosystem,” Bukhamseen told Arab News.

He emphasized how everything within nature is connected. The green turtle is a vital creature in the controlling of algae since it serves like a mini-cleaner in the water. 

The turtle nibbles on the algae to prevent it from taking over and completely covering and blooming over the coral reef — which is home to a huge population of fish. Coral reefs provide around 25 percent of the fish consumed from the whole ocean and sea. Algae serves as an important source of food for those sea turtles.

The exhibition held in Dammam was significant because the nearby waters produce larger fish meant to be eaten. In the Red Sea, on the opposite coast, those fish are more colorful but are “tiny” and thus not suitable for mass consumption. 

The waters in Dammam are more rocky and shallow and as a result, allow for sea creatures to thrive. The Red Sea is deeper and better for diving.

The next SIMEC AquaFish exhibition will be held at the Riyadh International Convention and Exhibition Center in early 2024.

NEOM secures $5.6bn to develop 1st phase of residential communities for workforce

NEOM secures $5.6bn to develop 1st phase of residential communities for workforce
Updated 06 June 2023

NEOM secures $5.6bn to develop 1st phase of residential communities for workforce

NEOM secures $5.6bn to develop 1st phase of residential communities for workforce

RIYADH: Developmental work is fast gaining pace at Saudi Arabia’s futuristic city NEOM as the giga-project finalized contracts worth SR21 billion ($5.6 billion) to build the first phase of residential communities for the workforce.

In one of the world’s largest public-private partnership deals for social infrastructure, NEOM signed up some of the leading Saudi developers to build 10 communities across the smart city that will accommodate an additional 95,000 occupants upon completion of the first phase. 

According to a press release, the preferred bidders who will invest in developing this first-phase residential project include Alfanar Global Development, Almutlaq Real Estate Investment Co., Nesma Holding Co. and Tamasuk Holding Co.

Tamasuk Holding Co. will be investing in the project through two separate partners — Al Majal Al Arabi Group  Co. and the Saudi Arabian Trade and Construction Co.

The deal goes well with the $500 billion project’s plan for more private sector participation in developing the city’s infrastructure.

“NEOM has selected some of the leading companies in Saudi Arabia as partners in delivering and operating temporary communities with world-leading services and infrastructure,” said Nadhmi Al-Nasr, CEO of NEOM. 

He added: “The newly formed partnerships mark an important milestone for the region and are a testament to the capabilities of our team and partners who rapidly achieved financial close on a record amount.” 

The project owner revealed that the temporary residential projects, used by the workforce during the construction period of NEOM, will be built sustainably, using relocatable modular units which can be repurposed once the communities are no longer needed. 

These residential communities will also include a wide range of lifestyle facilities, including swimming pools, entertainment venues, multi-purpose sports fields, cricket ovals and outdoor courts for other sports.

“We are elated to partner with NEOM on this multi-nodal infrastructure project and to contribute to NEOM’s vision of disrupting the conventional approach to urban living. This is in line with our commitment to deliver high-quality solutions in a sustainable manner,” said Sabah Al-Mutlaq, vice chairman of Alfanar Global Development.

NEOM said the second phase of the temporary residential project is expected to be issued to the market in the coming months as it is reviewing interest from investors with plans to shortlist pre-qualified participants from now.

Mohammed Al-Balwi, chairman of Tamasuk, said: “We are immensely proud to be NEOM’s infrastructure partners. Together with Almajal and SATCO, we are committed to delivering the infrastructure that will facilitate the wider and rapid development of NEOM.”

The giga-project is being developed to attract additional investors for its commercial assets. With the signing of the multibillion-riyal investment, NEOM looks to achieve the project’s goal of having a direct economic impact on the region through developing local competency and creating jobs while advancing the use of sustainable solutions in construction.

NIDC inks deal with Valeo Egypt to boost Kingdom’s automotive sector 

NIDC inks deal with Valeo Egypt to boost Kingdom’s automotive sector 
Updated 06 June 2023

NIDC inks deal with Valeo Egypt to boost Kingdom’s automotive sector 

NIDC inks deal with Valeo Egypt to boost Kingdom’s automotive sector 

RIYADH: In a push to localize the Kingdom’s automotive industry, Saudi Arabia’s National Industrial Development Center has inked a strategic deal with Valeo Egypt, the software development unit of the global automotive supplier. 

The two parties signed a memorandum of understanding set to pave the way for the localization of automotive components and manufacturing of modern systems for mobility technology in the Kingdom, the Saudi Press Agency reported. 

The MoU was signed in the presence of Bandar Alkhorayef, the Saudi minister of industry and mineral resources, and Ahmed Saleh, the Egyptian minister of trade and industry. 

The deal will significantly enhance the efficiency and growth of Saudi Arabia’s automotive sector, as charted in the National Industrial Strategy’s objectives. 

The NIS serves as Saudi Arabia’s roadmap for diversifying its industrial base, boosting non-oil exports, attracting foreign investment, promoting innovation and research, and generating local employment. 

The strategy revolves around three key objectives, namely developing a resilient industrial economy, establishing an integrated industrial center, and achieving global leadership in manufacturing selected industrial commodities. 

The NIS has set ambitious goals for the industrial sector, with the aim of increasing the sector’s contribution to the Kingdom’s gross domestic product from $88.26 billion to $377.06 billion by 2035.

Additionally, it hopes to boost jobs in the industrial sector from 900,000 to 3.3 million during the same period.  

Closing bell: Saudi bourses stay steady for the 3rd consecutive day  

Closing bell: Saudi bourses stay steady for the 3rd consecutive day  
Updated 06 June 2023

Closing bell: Saudi bourses stay steady for the 3rd consecutive day  

Closing bell: Saudi bourses stay steady for the 3rd consecutive day  

RIYADH: Saudi Arabia’s Tadawul All Share Index remained steady for the third consecutive day, as it edged up 23.28 points, or 0.21 percent, to close at 11,316.87 on Tuesday.  

While parallel market Nomu gained 112.78 points to reach 21,428.78, the MSCI Tadawul Index went up 0.05 percent to close at 1,497.65.  

The total trading turnover of the benchmark index was SR6.69 billion ($1.78 billion) as 104 listed stocks advanced, while 106 retreated.  

The best-performing stock on the day was Abdullah Al Othaim Markets Co., whose share price surged 8.19 percent to SR14.80.  

The Power and Water Utility Co. for Jubail, and Yanbu and Aldrees Petroleum and Transport Services Co. were the other top gainers, as their share prices soared 7.07 percent and 6.96 percent, respectively.  

Tihama Advertising and Public Relations Co. was the worst performer with its share price dropping 2.52 percent to SR19.36.  

On the announcements front, Saudi Arabia’s Capital Markets Authority approved the public listing of Fad International Co., Atlas Elevators General Trading & Contracting Co., Clean Life Co., and Riyal Investment & Development Co. on Nomu.  

According to bourse filings, Riyal Investment and Clean Life will offer 720,000 and 300,000 shares, representing 9 percent and 20 percent of their capital, respectively.  

On the other hand, Fad International and Atlas Elevators will float 240,000 and 1.2 million shares, accounting for 20 percent of each of their capital.  

Meanwhile, CMA issued a resolution to approve Al-Rajhi Co. for Cooperative Insurance’s request to increase its capital from SR400 million to SR1 billion by giving 1.5 bonus shares for every existing share owned by the shareholders. Its share price edged up 0.98 percent to SR123.60.  

The authority also approved a request by Takween Advanced Industries Co. to reduce its capital from SR950 million to SR464.65 million.   

According to a statement to Tadawul, the move will bring down the company’s number of shares to 46.464 million from 95 million. Its share price edged up 1.42 percent to SR10.