Investcorp expects growth in ME luxury goods market

LUXURY GOODS: Mideast mass luxury market set for 10% annual growth over coming years. (Getty Images)

The Middle East mass luxury goods sector is set to grow 10 percent a year and its market share in a $300 billion global industry is likely to rise from 5 percent now, Bahrain's Investcorp said on Tuesday.

The region's youthful population and relative wealth would be the main driving forces supporting the sector's growth, said Azmat Taufique, co-head of the investment bank's Gulf Growth Capital business.

"Notwithstanding the recent slowdown, the mass luxury business remains very strong," Taufique told the Reuters Global Luxury Summit in Dubai.

The expected increase in the region's demand for such goods also hinged on oil exports supporting economies, mainly in the Gulf, the world's top oil exporting region.

Taufique said the two main markets with growth potential, particularly for jewellery, are Saudi Arabia, the region's biggest economy and Egypt, the Arab world's most populous state with a population exceeding 75 million.

Dubai still had room for growth, although it is experiencing a downturn, he added.

The company foresees rising demand for gold jewellery due to the cultural and social importance attached to the commodity.

"Gold-based jewellery has very strong cultural resonance in the region," Taufique said. "It is seen as some kind of a store of value that doesn't disappear with time."

Investcorp, which once floated luxury brands Gucci and Tiffany, posted a net loss of $511 million for the six months to Dec. 31, its first loss ever as its hedge fund investments and portfolio companies were hit by the financial crisis.

Investcorp in March said it was leading a consortium to acquire a 70 percent stake in Saudi gold and jewellery maker L'azurde.

Luxury good sales in the first two quarters of 2009 face a decline between 15-20 percent that could shrink the business to 153 billion euros ($212.4 billion) from 170 billion euros in 2008, Bain & Co said in a report in April. (Reuters)

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