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Mon 15 Nov 2010 02:58 PM

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Futtaim sees single-digit UAE retail growth in '10

Group sees five percent retail growth in 2010, cars and furniture top consumer spending

Futtaim sees single-digit UAE retail growth in '10
Arab women mall

Consumer
spending in the UAE has picked up in recent months and retail
sales will rise at least five percent this year, driven mostly by furniture and
car sales, according to a major UAE retailer.

Dubai's
retail sector, which generates a third of Dubai's gross domestic product, was
hit hard when the financial crisis and the emirate's debt woes crimped consumer
spending and the number of tourists to the emirate fell.

"We're
in upper single digits in retail in the UAE this year, in the range of five
percent plus, and even further ahead in automotive ... Growth is going to be
even better next year," said Robert Willett, group CEO of Al Futtaim.

"Elements
in our retail business, like IKEA or Toyota, are doing extremely well, as is
Marks and Spencer, especially in places outside the UAE, like Kuala Lumpur and
Singapore," he said, adding that their operations in Asia were currently
outperforming those in the UAE.

Al Futtaim,
which was established in the 1930s as a trading business, has its headquarters
in Dubai and holds regional franchises of companies including IKEA, Toys R Us, Marks
and Spencer and Toyota Motor Corp.

A
survey of the global retail market in 2009 by consultancy CB Richard Ellis
showed Dubai was the second most attractive city in the world for retailers,
just behind London but ahead of Paris and New York.

But
retailers in Dubai, known for its opulent hotels and large shopping malls
packed with top global brands, saw a 45 percent drop in sales last year,
according to some industry estimates.

However
many retailers said the sector turned the corner in the first quarter of 2010.

"In
the retail business things have been flattish, but in recent months we have
seen some good growth which is continuing," Willett said.

The
emirate's flagship conglomerate Dubai World reached a $25bn restructuring deal
with creditors in September after shocking global markets the year before when
it called for a standstill on some of its debt obligations.

Willett
said the group's car and furniture businesses were doing particularly well,
along with financial services, especially insurance.

"We
are going to see steady growth in the UAE market place this year, but it will
improve at the back-end of next year. There are obviously better pockets, like
the auto business, the automotive parts particularly, financial services,
construction, will do well."

Al Futtaim
is one of the largest family-owned businesses in the Gulf Arab region,
developing large mixed use projects including Dubai Festival City and Cairo
Festival City.

The
company said in October it hoped to strike at least one more retail deal in the
next two years, as it looks to take advantage of falling construction costs and
"more reasonable" salaries. It was also eyeing opportunities in
another Gulf Arab state, the Levant and North Africa.

Al Futtaim
Group, Qatar Islamic Bank and Qatar's Aqar Real Estate Investment in September
signed a AED6bn ($1.6bn) deal to develop a large retail and leisure project in
Doha.

The
company is structured into seven divisions containing automotive, electronics,
engineering and technologies, retail, financial services, general services,
real estate and joint ventures.

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