The Wall Street Journal reports that Bain & Co are forecasting luxury sales to fall 10% this year to about $201 billion.

Despite the expected steep declines in sales in the U.S., Europe and Japan, which together account for more than 80% of world-wide luxury good sales, there are some smaller markets that are showing promise. Bain expects sales of luxury items to rise 7% in China and 2% in the Middle East this year.

Even if the China and Middle East relative bright spots do hold up, it will be little consolation to an industry that will remain dependent on the US, European and Japanese markets for some time yet.
Luxury retail GLA in the Gulf is certain to increase by more than 2% in 2009 (Dubai Mall, DIFC, MoE, Villa Moda‘s Bahrain expansion and Doha’s Villagio will see to that) which will be painful for retailers. Whether or not developers will compromise on rental rates signed in a different era in the name of successful long-term landlord-tenant relationships is an open question in a region where developers wield too much bargaining power. Hassan Daher’s recent decision to pull Virgin out of Dubai Mall (Emaar being perhaps the biggest bully of them all) is a hopeful sign in that regard.

Related articles by Zemanta

• Reflections on my first trip to Doha (joi.ito.com)
• Deleveraging Dubai. (shehabhamad.com)
• Difc 2009 #1 (chromasia.com)