According to the report, opposing forces are currently at work in the GCC retail market. A growing population, rising tourism and huge investments into new retail destinations will encourage increased consumption, while falling equity and real estate prices, slower economic growth and reduction in consumer credit work in the opposite direction.
The report forecasts that the GCC retail market will continue to grow at a nominal CAGR of about 6.6% in 2009 to 2011, a lower pace than that over the past five years. Rising income levels contribute about two-thirds of the growth while population growth accounts for the balance. GCC retail players are trading at a lower average valuation multiple than our emerging and developed market peer groups. Furthermore, GCC retailers boast a dividend yield of 8.5%, significantly higher than both emerging and developed market peers.
According to the report, it is expected that budget retailers focused on non-discretionary products would outperform in the short to medium term as consumers tighten their budgets in view of job uncertainties and weak sentiment. Retailers focused on discretionary luxury goods will face more challenging trading conditions in the short to medium term. Consequently, it suggest investors with a short term investment horizon focus on the non-discretionary consumer goods segments, while foreseeing interesting long term investment opportunities emerging in the next two years in the more cyclical discretionary luxury goods segments".
For more details please click here to access the complete version of the GCC Retail Industry Report.