Chinese Consumers to Drive Luxury Sales in the Middle East
SHANGHAI — According to a recent report from Barclays, a healthy luxury consumption rebound in the Middle East will be partly fueled over the coming months by China‘s reopening.
“We expect Chinese tourists to provide a boost to Middle East luxury sales over the next six to 12 months, which should be visible from the second quarter onward,” Barclays wrote in the report.
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“We estimate that Chinese tourism contributed around 10 to 15 percent of luxury sales in Dubai pre-pandemic,” the report continued. “Looking at flight data, it is clear that travel from mainland China toward Dubai is recovering at a much faster pace than toward Europe since year-to-date, thanks to higher flight capacity and targeted marketing campaigns from the city toward Chinese tourists.”
According to Barclays, in 2019, Chinese shoppers were the fifth-largest spenders in Dubai.
A packed agenda of major events in the Gulf this year, including Formula 1 Grand Prix races in March and October, and Expo 2023 in Doha, Qatar, launching in October, will become primary drivers of tourism this year.
To lure more travelers, Saudi Arabia’s Red Sea Project, an ambitious tourist hub with bewildering landscapes and hyper-luxury hotels, will also begin to open in phases this year.
The Barclays report said the hard luxury sector, in particular companies such as Compagnie Financière Richemont and Swatch Group, will benefit the most from incoming tourism in the region, as prices for jewelry and watches tend to be 10 percent cheaper compared to Europe.
“A watch dealer based in Riyadh recently told us that he continues to see very strong demand for high-end watches among Middle Eastern collectors, who are among the most enthusiastic in the world,” Barclays said.
The report pointed to Richemont-owned brands Cartier and Van Cleef & Arpel for their growth momentum in the Middle East, reflecting “a rapid change of tastes, which is seeing local consumers turn toward branded jewelry, particularly among younger consumer cohorts,” the report said.
As for the local clientele, Ramadan, the monthlong sacred holiday that began on March 22, will be a key sales driver.
Some notable brand initiatives include Dior Men’s first Ramadan collection and Valentino’s first exhibition in Doha.
This past week, the Italian luxury fashion house organized a whirlwind trip for its Chinese VIP clients before the exhibition closes on Saturday.
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