Rapid growth for Dubai retail despite rising costs

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• PMI up to 56.1
• Retail and wholesale grew quickly
• Hiring and inventory have slowed

Business activity and confidence in Dubai’s non-oil sector have returned to pre-pandemic levels, and retail in particular has shown growth.

However, rising costs have brought a halt to hiring and the discounting of prices, according to a new survey published this month.

The latest S&P Global Dubai Purchasing Managers Index (PMI) for September rose to 56.1, up from 55.0 in August. Any figure above 50 represents economic growth.

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“Dubai non-oil companies reported a rapid acceleration in sales growth during September, which climbed to the highest in over four years and was spurred on by new clients and strengthening economic conditions,” said David Owen, senior economist at S&P Global Market Intelligence.

At the same time, costs for businesses rose at the fastest pace for 14 months.

Staff hiring levels have therefore slowed and companies have shied away from discounting prices for consumers, the report said.

“The pick-up in cost pressures also appeared to inhibit hiring and inventory growth, which could lead to some capacity constraints if demand continues to rise rapidly,” Owen warned.

There was strong growth in Dubai’s core travel, tourism and construction sectors, but the survey found the wholesale and retail sectors were the standout industries, reporting rapid rises in recent months.

Halima Jumani, founder and CEO of family-owned food delivery company Kibsons, said there had been a huge increase in demand during the Covid period, when customers faced travel restrictions.

“Post Covid, the demand normalised and now we see demand returning to higher Covid levels,” she said, adding that Dubai consumer spending was now at a record high, equal to pre-pandemic levels.

Jumani confirmed that costs had risen, as the majority of produce is imported and higher interest rates have impacted local and international suppliers.

Yet she said hiring had not waned and that Kibsons was still actively recruiting new staff.

Evidence of the retail sector’s bouyancy came in Wednesday’s announcement that the Al Ghurair Centre is to add 25 new shopping and dining additions as part of a revamp of Dubai’s first ever shopping mall.

The new units bring the total store count at the mall, which opened in Deira in 1981, to over 240.

“The Covid-19 pandemic brought challenging times for malls, causing significant shifts in market dynamics and deal structures,” Anwar Atari, CEO of properties, commercial and residential, said in a press statement.

“However, we are proud to say that Al Ghurair Centre has achieved the highest occupancy levels, with international and prominent local brands eager for visibility.”

Atari told AGBI he agreed with the findings of the latest Dubai PMI and the mall had seen a resurgence in customer footfall. At the same time, he confirmed costs were still rising “which continues to present challenges for businesses across the board”.