UAE businesses dispute predicted Ramadan downturn

Dubai Tourism

• Fall in holy month spending forecast
• Retail and hospitality remain bullish
• Real estate hopes for improvement

UAE businesses are optimistic about Ramadan’s prospects in spite of a projected 10 percent decline in spending over the holy month.

The anticipated dip is partly linked to considerable consumer expenditure after the pandemic and during recent festive sales, according to a study by Redseer Strategy Consultants.

“The last two years were a period of pent-up celebration, and so we saw more heightened spending levels,” says Redseer’s associate partner Akshay Jayaprakasan.

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Jayaprakasan anticipates a moderation of spending of about 10 percent. “The excitement continues to be high this year but slightly below the peaks of the 2023.

“The UAE also had a strong Black Friday season where consumers spent significantly, which is also one of the reasons for Ramadan to be slightly muted,” he says.

Redseer’s report expects consumers to prioritise affordability this year, compared to last year.

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The retail response

Ashish Panjabi, chief operating officer at Jacky’s Retail LLC, disputes the predicted drop in sales. He says in-store buying will increase over the holy month, driven by tourist traffic and better mall offerings.

“We’re expecting growth in specific categories such as air fryers and home baking products, alongside an uptick in cooling product sales ahead of summer.” 

Panjabi projects an 8 percent growth in spending within Jacky’s retail segment, as well as a more conscientious trend towards sustainable practices like trade-ins and upgrades.

Hayan Merchant, founder and CEO of Navitus Parfums, forecasts a 25 percent increase in fragrance purchases this year, driven by a boost in population and tourist numbers.

Reuters/Abdel Hadi Ramahi

Dining out

Redseer’s analysis predicts an increase in home cooking during Ramadan, with a notable intent to spend more on groceries. 

This marks a reversal from 2023, where the consultancy predicted less home cooking, reduced grocery purchases and more spending on dining out and food delivery.

Jayaprakasan expects a corresponding decline in restaurant order volumes this year, but an increase in average order values from takeaways.

Naim Maadad of Gates Hospitality challenges this view, citing the region’s high dining-out culture. 

“With the weather still pleasant, I still see people enjoying outdoor venues,” he argues, adding that this month is still a strong tourist season for the region. 

Maadad remains bullish about business, attributing sustained consumer spending to value, ambiance, and service quality.

“While we are all trying to save, the spending power is still out there,” he says. 

Reuters/Abdel Hadi Ramahi

Echoing Maadad’s optimism, Erika Doyle, founder of non-alcoholic drinks marketplace Drink Dry Store, predicts stable or even increased consumer spending. 

“The UAE economy is booming, and people have a lot of spending power and are shopping not only for necessities but also for luxuries,” she says.

However, Doyle says the impact of the Red Sea crisis on import costs could weigh down businesses. 

“If freight costs rise by over 300 percent, a price hike is inevitable, though we plan to hold our prices steady until after Ramadan to support customers’ celebrations.”

The food service market in the UAE is estimated to reach $19 billion in 2024, according to a report by consultants JLL.

Real estate

Samer Chehab, founder and CEO of Propertyguru.ae, says last year’s Ramadan was the low point of 2023, with a sharp drop in transactions over the period.

However, he anticipates a turnaround for 2024. 

“We’ve had two consecutive months of growth, reflective of the momentum in the Dubai property market,” Chehab says, pointing to steady international demand.

The month allows for an accelerated processing of leads from Western investors due to fewer local daytime inquiries, he says. 

Shorter work hours during Ramadan will also give people more time for home buying efforts, boosting leads for brokers, particularly in the off-plan market, he adds.

Toni Abou Jaoude, sales and leasing manager at Betterhomes, says that Ramadan is an opportune time for brokers to meet more potential clients, laying the groundwork for future business prospects. 

“It’s not just about transactions, it’s about fostering genuine, lasting relationships and cultivating community engagement.”