Tuesday, Jan 17, 2017

Dubai: Jewellery retailer Malabar is putting together a Dh335 million expansion to extend its network by another 24 outlets between now and end March. Nine of these will be in the UAE, seven in India and the others in some of the other Gulf markets. This will take the network to 168 locations, including the 82 in India.

Two of the major new openings will be in Dubai Gold Souq, where the retailer will then have four locations with a combined 10,000 square feet. “Gold prices seem to be in a less volatile phase — even though there is no sign of heavy consumer buying, we feel the time is opportune to widen our presence,” said M.P. Ahmad, Chairman of Malabar Group. “The expansion will help us grab market share, something we did in 2009-10 as well.

“These days, retailers will have to look beyond high margins and build growth on volumes. For instance, our Gold Souq additions should help us attain anywhere up to 20 per cent of transactions that take place there — the focal point of jewellery trade in the region.” (The retailer currently claims a 13 per cent share of sales done through Gold Souq.) It was not revealed what the split would be between investments in the Gulf and India.

According to market sources, Dubai’s gold retailers continue to absorb the 5 per cent duty on imported jewellery rather than let it reflect in showroom prices. It was recently that local authorities scaled back the rebate offered on such imports. (But the 0 per cent import duty on bullion remains firmly in place.)

“Currently, only about 50 per cent of the jewellery consumed locally are brought in ... the balance is getting designed and made at factories in the UAE,” said Ahmad. “That means any effective increase from any future passing on of the import duty will be effectively limited to 2.5 per cent.

“Currently, the Dubai Board Rate [on a per gram basis] is still 10 per cent cheaper than gold in India, Pakistan and the other South Asian markets. That will continue to be the biggest advantage.

“Specific to India, the gold rate here and the making charges are cheaper and cannot be matched by India.”

After an extremely difficult trading period for the better part of 2016, recent weeks have offered some glitter for local jewellery businesses. Tourist led buying has gained and there continues to be growing interest among non-Gulf Arabs to pick up 18-karat jewellery as accessories rather than as investments.

“Any sign of new sets of buyers coming through can be encouraging for the entire jewellery business,” the Chairman said. “If they don’t come, those buyers have to be created — the Levant Arabs could provide a decisive impact later on.”

Rupee buyers are back in Dubai’s Gold Souq

Dubai

Even demonetisation cannot keep Indians from wanting gold for long.

Just weeks after the Gold Souq here saw all of its rupee-carrying Indian visitors become scarce, they are back in action. This was during the period from November 8, when the Indian Government announced the demonetisation drive, to end December, which was a key timeline in the transition process.

In recent days, however, there are some signs of Indian shoppers bearing their rupees and putting them up for jewellery purchases.

“They have not come anywhere near the pre-November 8 levels ... but they are there, and more transactions are also being done through credit cards issued by Indian banks,” said a Malabar Gold & Diamonds spokesperson. Indian shoppers will always have a reason to buy gold.”

By Manoj Nair Associate Editor

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