Is Investing in the Retail Sector a Good move?

The UK retail sector has a habit of cycling through booms and busts, and at the moment it seems it’s more of a bust in all areas, apart from food. Clothing and footwear retailers in particular have been hit hard recently.

The ONS reports that sales volume is down on last year. Although the overall trend is still one of growth, it has become somewhat more volatile in recent months.

Consumer spending online is increasing, but at the same time consumers claim to be looking for ways to reduce their expenditure, as wages suffer from ever-increasing pressure.

Where’s the value?

So, is the retail sector worth investing in? The simple answer is – it depends where, and in what exactly. As previously mentioned, UK supermarkets still seem to be able to encourage consumers to purchase food, although there has been a drift towards more own-brand sales, based on lower pricing. And investment specialists such as Maritime Capitalstill manage to find lucrative private investment opportunities in the retail sector.

On the other hand, the retail sector in other countries can provide some extremely interesting and lucrative opportunities for investing. Take Qatar for example; the government plans to develop the sector to meet the demand of a population with increasingly high purchasing power, with plans for one million more commercial square metres in the coming years.

Experts have calculated that that the Qatar retail market will increase with a compound annual growth rate of 9.8%, amounting to 284,000 million dollars in 2018 and offer the fastest increase in the Persian Gulf region.

The fall in the price of oil has meant a fall of state revenues, so the country is actively seeking the participation of private and foreign investors. The development of the retail sector in addition to propping up the economy offers excellent opportunities for them.

The Qatari market was ranked the fourth most attractive in the world by the Global Retail Development Index back in 2015 and ranked first in the Middle East.

Open for business

The recent initiatives of the government are helping to awaken the interest of foreign capital, as in the case of the Mall of Qatar, the Doha Festival City or Place Vendome.

Approval for a law at the end of 2016 introduced the use of public-private partnerships, which has been valued in a positive way, since they will serve to channel new foreign investments into the country.

These associations are seen as a viable alternative to more traditional procurement models and will allow private capital to participate together with the government in decision-making and in the distribution of profits.

Future plans

In addition to having a rapidly growing population with high purchasing power, the Qatar market is distinguished by a taste for luxury goods.

All this has triggered the entry plans of high-end brands and it is expected that new firms will follow suit, as more than a million new square metres of commercial real estate for sale will come into operation in the coming years.

So, if the UK retail sector doesn’t whet your appetite for investing, maybe it’s time to look slightly further afield for better returns and the promise of a bright future.

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