Luxury is a national obsession in the UAE, say advertising industry analysts.

And rather than taking the shine off all that glitters, the credit crunch could put the exclusion back in exclusive. Part II

Dec 22nd, 2008

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UAE may be one of the biggest luxury mar ets in the !orld, but it is certainly not immune to the current economic slo!do!n" Particularly #ulnerable is Dubai, a city fueled to!ards boomto!n status than s in part to a debt$riddled real estate explosion" A %inancial &imes analysis explains that 'as oil prices, the main dri#er of the (ulf boom, slid sharply to!ards )*0 a barrel, Dubai+s high le#els of debt reinforced concerns o#er the bubble forming in its property mar et", -ther (ulf states !ith declining oil re#enues !ere not immune to the credit crunch, !ith go#ernments scrambling to in.ect li/uidity into their ban s" 0ut don+t count the region, its hunger for luxury and its mar eting opportunities out .ust yet" 1errill Lynch and 2apgemini+s 3orld 3ealth 4eport 2008, a document that analy5es trends in the number and beha#ior of high net !orth indi#iduals, points out that the mar et for luxury products and ser#ices in emerging nations is remar ably resilient" 'E#en as financial mar et turmoil made an

impact on the United 6tates during the second half of 200*, luxury goods ma ers, high$end ser#ices pro#iders and auction houses all found ready clients in the emerging mar ets of the !orld", Dubai itself is testament to this" &he Dubai 1all, !hich 7finally8 opened in 9o#ember, boasts large concept stores for luxury fashion brands" &hese include (aleries Lafayette from %rance and the first 0loomingdale+s to be located outside the U6 : !hich is scheduled for a 20;0 launch" <t has ta en a cue from the 1all of the Emirates and one of its anchor stores, =ar#ey 9ichols, creating an en#ironment and presence as a substitute for direct mar eting" =o!e#er, 1ac 1c2lelland, chairman of the Dubai chapter of the Luxury 1ar eting 2ouncil points out that the influx of luxury brands into the region is fueled by a sur#i#al instinct : to expand their mar etplace in response to the credit crunch" Luxury mar eters are see ing outside mar ets to a#oid being mired by belt$tightening among European and American consumers" Luxury li#ing pro.ects such as &he &iger 3oods Dubai and artificial island #entures are ongoing, and 0ur. Al Arab, the epitome of hotel luxury, has become all but a national icon for the burgeoning emirate" 9o#ember also sa! the regional launch of the 013 * 6eries in Dubai+s 1ontgomery (olf 2lub" And !hy not> &he region boasts approximately ?00,000 millionaires, according to the 1errill Lynch and 2apgemini report, !hich represents a ;* percent increase during 200*" &he regular @oe" Aet the luxury mar etplace is not entirely untouchable, since it is itself a little fractured" 3hile ultra high net !orth indi#iduals 7U=93<s, those possessing o#er )B0 million8 might be facing little change in their buying habits, luxury mar eters may need to once again !oo regular @oe 1illionaire, the 'aspirational luxury consumer,, !ho might not opt for the absolute latest in luxury car brands for instance, says 1c2lelland" &he net result e#ens out some!hat, since U=93<s are li ely to spend more as they find better deals on luxury products" '&hey+re still buying the exclusi#e stuff, they+re .ust not paying as much for it,, he says" '&hey+re not ha#ing to go shop at discount stores in order to sur#i#e", <n short, U=93<s might end up buying e#en more luxury products, since they+re going to be a#ailable at better prices"

At any rate, the region !ill continue to lure tourists loo ing for a bargain in this tax$free 5one, as it offers better prices than Europe and the U6" 'Aou+re not going to see the hit that you see around the !orld,, he says" Premal Patel, the 1iddle East+s senior director of mar eting for American Express says the expansion into the region of global luxury brands is .ust a continuing trend carrying o#er from the last fe! years, !ith increased commoditi5ation of luxury retail products being an attempt to offset the cost of creating a luxury en#ironment for the brand" '&he globe is accessible to most brands no!adays" &he opportunities in emerging mar ets for the last fe! years ha#e been so immense,, he says" '1any, many brands ha#e come in and set up and expanded their portfolios to appeal to a !ider group of people", &hough the ultra$rich might not be terribly affected or concerned by a global economic meltdo!n, the o#erall mar et and its P4 machine are certainly not immune to it, and brands are acti#ely trying to !eather the storm" Except that it seems a lot of global luxury brands are trying to !eather the storm by setting up shop here" &he campaign to adopt the sil#er spoon as Dubai+s national symbol begins here"