Handbags and gladrags: price not an issue for Dubai’s fashionistas

Dubai Tourism

• Dubai 12th most expensive city
• More HNWIs moving there than US
• Luxury residences sought after

Fashion Avenue in Dubai Mall reads like a Who’s Who of luxury brands. Discerning — and well-heeled — residents and visitors can casually survey the latest from Boss, Christian Louboutin, Chanel, Tiffany and Louis Vuitton, undaunted by a cost of living crisis that has marked much of the world.

Dubai has just been named the sixth most expensive city in Europe, the Middle East and Africa (Emea), according to global wealth managers Julius Baer, and 12th in the world.

Ladies’ handbags and men’s suits cost more in the emirate than anywhere else in Emea, but that appears to matter little to the discriminating shoppers in Fashion Avenue.

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The latest edition of Julius Baer’s Global Wealth and Lifestyle Report found that 65 percent and 52 percent of those surveyed intend to spend more in the coming year on suits and handbags, respectively.

“Higher than average spending on these discretionary items reflects the wealth of the city, which is now the 21st wealthiest in the world,” the report says.

There are plenty of takers for the top-end merchandise in which Fashion Avenue specialises. A paper by Henley & Partners, which advises on international migration, has forecast around 6,700 high net worth individuals (those with liquid assets of more than $1 million) will relocate to the UAE by the end of 2024 — nearly double the number expected to move to the US this year.

"Luxury shoppers are not very price sensitive, and convenience, experience and authenticity is a lot more important to them than getting a product at the lowest price,” says Sandeep Ganediwalla, partner for the Middle East and Africa at Redseer Consulting. 

Etoile Group, a luxury fashion retail company, this month announced the launch of 11 new stores across the GCC region offering brands including Etoile La Boutique, Aquazzura, Tod’s, Etro and Chanel.

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“Over the past four to five years, we have seen frequent price increases on luxury goods due to global inflation, production and transportation costs, supply chain disruptions, and ongoing innovation by luxury brands,” says Pierre De Saint Hilaire, director of finance at Etoile. 

“However, with the European Central Bank's first rate cut in early June, we believe this trend might ease in the future.”

Erika Blazeviciute Doyle, founder of Drink Dry, a non-alcoholic online shop in the UAE, says sales of her company’s high-end French sparkling wine have also increased.

“Consumers are looking for experiential luxury above all else,” she says.

But she says that price rises from suppliers arising from continuous increases in the cost of raw materials, as well as a spike in shipping costs globally, will lead to higher prices at the end of 2024 or the first quarter of 2025.

According to Julius Baer, the price of real estate in the emirate – which accounts for almost 9 percent of the Dubai economy – increased 16 percent in US dollar terms over the past year.

“The region’s wealthy are spending the highest currently on luxury residential properties compared to any other region, amid strong economic growth and world-class infrastructure,” it says.

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Diana Nilipovscaia, CEO at Mered, a high-end real estate developer, predicts “heightened competition” for luxury properties and greater developer focus on branded residences.

More than half of wealthy Middle Easterners in the Julius Baer survey said they had spent on residential property in the past 12 months, and 58 percent said they would spend more in the coming 12 months.

"No other region comes even close to this,” says the report.