Even Amid Iran Tensions, Dubai's Economy Remains On A Sustainable Path: Alpen Capital

(MENAFN- Khaleej Times) Dubai and the wider UAE are well-positioned to weather any fallout from the Iran conflict, with the emirate's long track record of resilience through regional and global crises, an expert said.

“Dubai has repeatedly bounced back from major shocks, including the Gulf War, the 2008 financial crisis and the Covid-19 pandemic, and would likely recover quickly from this one too,” Hameed Noor Mohamed, Managing Director of Alpen Capital, told Khaleej Times.

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According to Alpen Capital's latest GCC Retail Industry report, the UAE retail sector is poised for the fastest growth in the GCC over the next five years, with sales projected to reach $129.5 billion by 2030, underscoring the country's growing role as the region's consumer and shopping hub. The forecast comes as retailers increasingly embrace artificial intelligence, omnichannel models and value-focused offerings to cater to changing consumer behaviour.

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The UAE retail sector is expected to post a compound annual growth rate (CAGR) of 3.6 per cent between 2025 and 2030, outperforming other Gulf markets and slightly exceeding the regional average of 3.3 per cent. GCC retail sales overall are forecast to grow from $329.6 billion in 2025 to $386.9 billion in 2030, adding more than $57 billion in new spending.

While geopolitical tensions and supply chain disruptions have weighed on retail spending this year, long-term fundamentals remain intact, supported by population growth, tourism and rising incomes. GCC retail sales are projected to regain momentum as consumer confidence improves and governments continue investing in infrastructure and economic diversification initiatives.

The UAE's retail market already contributes around 18.7 per cent of GDP, while total retail sales reached $103.2 billion in 2024, growing at a CAGR of 4.7 per cent between 2019 and 2024. The country's position as a tourism and wealth hub has been a major driver, with Dubai attracting 18.7 million international overnight visitors in 2024 and Abu Dhabi drawing 3.2 million visitors.

Ecommerce trend

A key trend reshaping the sector is the rapid shift towards digital commerce. The UAE's e-commerce market was valued at $8.8 billion in 2024, accounting for about a quarter of the wider Mena market and expanding at a CAGR of 20.9 per cent since 2019. Approximately 70 per cent of UAE consumers used AI to support shopping decisions in 2025, highlighting how technology is influencing everything from product discovery to purchasing.

“The GCC retail industry is increasingly moving towards an omni-channel business model as consumers demand greater convenience, flexibility, and consistency across online and offline shopping experiences,” the report said, noting that retailers are using stores as fulfilment hubs, offering services such as buy-online-pick-up-in-store, same-day delivery and buy-now-pay-later options.

The growth of quick commerce is also accelerating. GCC e-commerce sales climbed to $25.2 billion in 2024, up from $9.9 billion in 2019, while regional players and global entrants compete aggressively on delivery speed, consumer convenience and personalisation.

Retailers are simultaneously responding to consumers' increased focus on value. Private-label products, discount formats and promotional offers are gaining traction as shoppers seek affordability amid persistent inflationary pressures. At the same time, premium and luxury segments continue to benefit from strong spending by high-net-worth individuals and tourists.

On interest rates, Noor Mohamed said a modest 25-basis-point move by the US Federal Reserve would have only a limited impact on mortgage demand in the UAE. He argued that small rate changes are unlikely to alter consumers' borrowing decisions, with larger increases of 1-2 percentage points having a more meaningful effect.

“A competitive retail landscape is driving GCC operators to increasingly adopt AI and advanced analytics to enable personalised customer recommendations, automated decision-making and improvements in operational efficiency,” said Noor Mohamed.“Looking ahead, operators are expected to pursue consolidation to streamline operations, adopt technology to enhance competitiveness and expand market share, and strengthen their product customisation capabilities.”

Change in consumer behaviour

The report also highlights how consumer behaviour is changing across the Gulf. GCC shoppers are increasingly embracing health-focused products, gourmet grocery concepts and experiential retail, while malls are evolving into lifestyle and entertainment destinations rather than purely shopping venues.

Despite near-term challenges, industry executives remain optimistic.

“The GCC continues to strengthen its position as one of the world's most dynamic retail markets,” said Neeraj Teckchandani, chief executive of Apparel Group, noting that artificial intelligence and intelligent automation are transforming customer engagement and decision-making.

Patrick Chalhoub, Executive Chairman of Chalhoub Group, said the region continues to benefit from“strong structural drivers” including tourism, infrastructure spending, a young digital population and the growth of e-commerce, adding that the future of retail will be defined by“more personalised, seamless and relevant experiences”.

For retailers in the UAE, growth is expected to increasingly come from marrying physical retail with digital innovation, while meeting consumers' demands for convenience, affordability and personalised experiences. As the sector heads towards a projected $129.5 billion market by 2030, technology and tourism are expected to remain the dominant forces shaping the next chapter of Gulf retail.

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