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With limited new retail space at Dubai's fabled Gold Souq, older properties — even one that hosted a restaurant until now — are being snapped up by jewellery retailers at that location.
A prime tourist attraction, 70 per cent of sales at the Gold Souq are now made to overseas visitors, for whom jewellery represents the single biggest purchase during their stay here. And the size of these buys are getting bigger — the average gold or jewellery related transaction these days is estimated at Dh6,000 per purchase (or 40gm in weight terms), according to market sources.
All valid reasons why jewellery retailers need to have high visibility at the Souq. Malabar Gold and Diamonds has done so by going for an extensive makeover of an existing property, for what it says, is the largest jewellery showroom in Dubai.
It has taken two levels in a ground plus four-storey structure on a 10-year lease, and extensively redone the ground floor into a 4,500 square feet jewellery outlet. (It was earlier used as a restaurant.) Within Dubai's broader retail space outside of malls, demand for space has been highest from fashion and jewellery retailers as well as operators in the F&B space.
''Based on projections of future demand, we could add an additional 5,000 square feet on the first floor,'' said M.P. Ahmad, Chairman of Malabar Gold. ''While jewellers have expanded elsewhere in the city, and some even into malls, the Gold Souq remains the heart of the trade. It's one of the top destinations in Dubai for tourists and those who are likely to make all jewellery-related transactions there itself.
''We have also seen that it has become the place to buy gold for UAE residents living outside of Dubai. But coming up with a newbuild location at the Souq is impossible, and any lease acquisitions have to be done for record transfer key money (in millions of dirhams).
''Dubai offers a competitive pricing advantage on gold not just for visitors from India, but from the rest of the subcontinent and even within Asia as a whole. Opening the new souq location was crucial because of the peak buying season running all the way up until February. The extra space helps us stock collections from a higher number of sources as well as on 18k and 24k in addition to the 22k staple.''
Malabar Gold already has one outlet at the Gold Souq. The second outlet will stock merchandise with a collective value of Dh100 million plus, which is higher than any other location in the retailer's network.
''For the 12 months ending March 31, 2015, our overseas operations will represent more than 50 per cent of Group revenues, up from the current 45 per cent and the rest from India,'' said Ahmad. ''However, overall revenues should remain at $3.5 billion (Dh12.86 billion) because of the decline in gold by 20 per cent. While we will do more volumes, the lower prices will offset some of that advantage.''
Expanding into new Far East markets will be a priority, which would add to the two locations it has in Singapore. The UK and US too remain live possibilities.
Get to know about the free zone catering to the jewelry industry
Source: Manoj Nair, Associate Editor, gulfnews.com