A burgeoning middle class, strong economic growth and the positive effects of market liberalisation are combining to create a retail renaissance in urban Syria, prompting a flood of foreign brands and overseas investment to the country. The latest predictions from the Central Bank forecast growth for Syria’s economy at a robust 5% this year, up from 4% in 2009. According to Syria’s Central Bank governor, the majority of this growth will be generated from finance, services and tourism – all white-collar sectors benefitting from the government’s ongoing liberalisation policy. Inflation is also set to fall to 3%, down from 4% in 2009, which will help further encourage middle class consumption.
Even electronic retail is beginning to take off – the country’s first online grocery store registered 2000 clients in its first three months, according to Syria Report, a local economic periodical.
To accommodate this increased demand, investors from the Gulf in particular are looking to establish new, air-conditioned retail spaces in and around the Syrian capital. The Dubai-based Majid Al Futtaim Properties (MAF) announced at the start of May that it would be investing $3.5bn across the Middle East on four new shopping malls. Of the four announced, the largest gross leasable area was reserved to the proposed Mall of Syria, to be located on the outskirts of Damascus. The Mall of Syria is expected to have a of 200,000 sq metres and is due to open in 2014.
The potential for continuing expansion in the retail segment is sizeable but franchises and mall developers will have to work hard to recapture the local market, particularly since visa-free travel was recently permitted between Turkey and Syria at the start of the year, which has allowed increasing numbers of Syrians from the Aleppo region to take advantage of the various brands available in Turkish cities like Gaziantep, just a short distance from the Syrian border. According to the Financial Times, Syrians now make up 5% of 850,000 monthly customers in Gaziantep’s Sanko Park shopping centre – a sure indication of the massively suppressed demand for franchise retail in the country.
Inditex Group signed a franchise agreement with a local Syrian company, which plans to open two Zara stores and two Massimo Dutti by the end of this year. The main cities targetted are the capital of Damascus and Aleppo, the second largest city in Syria. Spanish rival Mango is already present since 2009 with two franchised locations in Damascus.
Syria’s luxury retail market is also set to grow considerably within the next two years, several top international brands being already present in multibrand (wholesale distribution) with some exploring the possibility of expanding in monobrand franchising. Bruno Magli and Fratelli Rosetti are among the latest luxury brands with a formal presence in the capital city of Damascus. Lebanese luxury retailer Aishti which already operates over 1.000 sqm of a luxury multibrand spaces within the shopping gallery adjacent to the Four Seasons Hotel is set to open a second location within the Old City, area which also benefits from the presence of THE KHAN (formerly Villa Moda Syria), a large luxury lifestyle destination which includes fashion and accessories collections of Dior, D&G, Ferragamo, Ralph Lauren, Gucci etc. The owners of THE KHAN have also announced they will be expanding the building with a dedicated luxury menswear store and a luxury boutique hotel by mid 2011. All these developments in luxury retail provide wealthy Syrians with an alternative to the traditional destination of Beirut.
The luxury cars sector has also seen a significant increase this year, with PORSCHE opening at the end of May a showroom with service facilities in the capital city of Damascus. Other major luxury car brands with representation in Syria are BMW, Mercedes Benz and Audi, with BMW topping the list of the highest number of new cars sold in 2009.
Hospitality is another sector which has seen the addition of three new five star boutique hotels, all of them opened this year in the Old City quarter of the capital Damascus. Most of these new developments are extensively renovated heritage buildings, which help establish Damascus as one of the most authentic Middle Eastern tourism destinations. Syria’s leading luxury hotel, The Four Seasons Damascus has also seen an increase in the number of locals frequenting its food and bar outlets, which provide the ideal venue for the social life of the rich and famous. Even exotic fare like sushi has been making a splash among the moneyed elite in the capital, with chains such as Lebanon’s Sake opening branches in Damascus. Other important new openings of premium food & beverage outlets in the capital of Damascus include two French restaurants are the franchise of the UAE based Shakespeare & Co. The growth of the hospitality sector is not only driven by the increased spending power of the locals but also by the 71% increase in foreign travellers visiting Syria in the first quarter of 2010, compared with the same period last year, as reported by the Syrian Ministry of Tourism.
CPP has been covering Syria since 2008, issuing an yearly luxury market report which analyzes each luxury segment and highlights the luxury consumer profile.
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