GCC Business Climate

Download 2015 GCC Business Climate Reports

Economic indicators and analysis: Retail, Food & Beverage, Health & Nutrition and Construction in the GCC

2015 GCC Business Climate Reports covering GCC member territories Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain and Oman.

Retail

The retail sector in the GCC is expected to grow at a 7.3% CAGR and reach US$ 284.5 billion by 2018, according to a 2015 report by Alpen Capital (3), with Saudi Arabia holding the largest share (46.4%) of the region’s total retail sales.

According to a study by Aljazira Capital (1), this growth is due to a major shift in the market structure involving the conglomerations of family owned businesses with international corporations that are better equipped to handle the demands of a growing youth population. A desire for the latest technologies and state-of-the-art retail facilities has led to the construction of large shopping malls and retail venues to meet this demand.  In addition, some countries in the GCC still lack a proportionally relevant amount of retail space per capita, suggesting plenty of room for growth in this area.

Food & Beverage, Health & Nutrition

The Food & Beverage and Health & Nutrition industries are expected to grow at a 3.5% CAGR through 2019 and forecasted to reach 51.9 million metric tonnes (MT) according to a 2015 study by Alpen Capital (2).  Factors affecting this growth include an increasing level of affluence in the general population and increased consumer awareness of nutritional health in areas of organics, protein supplements and international foods.  In addition, more tourism and growing populations of expatriates living in the region has led to an increased demand for westernized cuisine.  Finally, because food production in the Middle East region is restricted due to its arid climate, the GCC market is heavily reliant on imports to meet these demands.

Construction

Driven by increased demand in Fashion & Retail, Food & Beverage, Health & Nutrition and Tourism, the Construction industry in the GCC continues to expand.  Tourism is a major driving factor as surges in this industry has brought with it more demand for international goods and services.  With this expansion comes higher budget allocations, allowing for new construction activities that further the economic development.

An increased demand for new housing due to advances in regulatory framework for real estate in Saudi Arabia furthers the demand for new construction.  As populations continue to rise and GCC nations win bids on mega events, more construction will further increase need for expanded services in related industry.

Citations:

  1. KSA Retail Sector.  July 2012.  Aljazira Capital Research Division.  http://www.effentiicorp.com/wp-content/uploads/2014/08/KSA-Retail-2012.pdf
  2. GCC Food Industry Report, April 2015.  Alpen Capital.  http://www.alpencapital.com/downloads/GCC_Food_Industry_Report_April_2015.pdf
  3. GCC Retail Industry Report, January 2015.  Alpen Capital.  http://www.alpencapital.com/downloads/GCC_Retail_Industry_Report_January_2015.pdf
  4. GCC Construction Industry Report, June 2015.  Alpen Capital. http://www.alpencapital.com/downloads/GCC_Construction_Industry_Report_June_2015.pdf