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Abu Dhabi's retail business growth will likely outperform all other markets in the Gulf Cooperation Council (GCC) in the years ahead as its rapid economic growth and high disposable income fuel consumer spending.
Abu Dhabi is home to some of the world's richest. The emirate's economy grew at a staggering 30 per cent in 2008, its gross domestic product (GDP) reaching US$160 billion on the back of record oil prices. Though global oil prices fell last year from their lifetime highs in 2008 due to the world economic slowdown, Abu Dhabi's economy remained relatively insulated and investments in long-term infrastructure projects meant the growth momentum continued, albeit at a slower pace. According to reports, four new malls in Abu Dhabi are set to open within months and the retail space in Abu Dhabi is expected to increase to 1.2mn sqm from 700,000. Fuelling the retail boom is the relatively high margin in business, which could range anywhere from 60 per cent to 70 per cent in restaurants to as high as 60 per cent in fashion accessories.
For food items, household articles and consumer durables, the margins are smaller, but their high sales volumes more than make up for the lower margins.
In gold jewellery, the world's most sought-after in precious metals, the margin ranges from 3 per cent to 10 per cent, but high sales volume drives the profitability of retail outlets.