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Although 40% of the sales revenue increase arises from the depreciation of the Euro, even at constant exchange rates versus last year, the projected 2010 growth constitutes a 6% year-over-year increase, he noted.
Growth in global luxury sales is being driven by emerging markets, especially China, which alone is expected to achieve 30% year-on-year growth in its luxury retail market this year, reaching EUR9.2bn, he said.
Global growth in luxury goods to slow in 2011
Next year, worldwide growth in the sector is expected to slow to 4%-5%, partly due to the strong bounce back in sales in 2010 and the fact that democratisation of the luxury goods market across the world has been achieved.
In the Middle East, the luxury retail sector is forecast to rise 8% this year to EUR4bn, boosted by tourism growth, especially in Dubai, and rising consumer confidence. HSBC's consumer confidence index for the region in the first half of 2010 climbed to 69%, which is on par with levels seen prior to the downturn, he noted.
However, while the region is forecast to continue to grow in the coming years, it is entering a 'new reality' that will keep growth below levels seen prior to 2008. The make-up of tourists to the region has changed, and they are now less inclined to buy luxury products.
The fact that several key markets in the region have reached maturity will also limit growth in the future. 'I think many of the markets in the GCC now have reached a level where stores are already here and now it becomes more about not so much building a network, but more gradually and incrementally fighting for share and fighting to increase sales per square metre,' he said.
The more restrained growth is not a bad thing for the luxury market, he argues. 'We came from an era of hypergrowth, where many luxury brand retailers had achieved a 30% annual growth rate from 2005 - 2008. This was really exuberant type of growth. I think for 2010 we are now entering a period of healthy growth, but not exuberant growth.'
Whereas in the past luxury brands were launched in Dubai and used the emirate as a platform for expansion in the region, now there is a bigger focus outside the GCC. For example Dubai-based Majid Al Futtaim Group has opened new shopping malls in Lebanon, Syria and Egypt. Fabre predicts more growth in the luxury sector in these three countries, and possibly Iran, in the future.
Jeff Florian, Senior Reporter
