Dubai Dispatch

Dubai, the City of Gold—its name resonates with the precious metal. Though affluent Arabs increasingly favor diamonds, gold hasn’t lost its luster yet in the United Arab Emirates whose citizens show a great penchant for it. According to the World Gold Council’s Dubai office, gold sales in the first quarter of 2006 increased to 2.1 billion UAE dirhams compared with 1.9 billion dirhams in the same period in the previous year. Dubai’s booming gold and jewelry market has also been one of the major factors contributing to the exponential growth of tourism in the Emirates.

Industry statistics reveal that about 45 metric tons of jewelry were manufactured in Dubai in 2003 using scrap gold and bullion bars. This figure is expected to increase by 25 percent in the next two to three years. Says Chandu Siroya, director of Siroya Jewelers, “Dubai is one of the cheapest places to buy jewelry, as one has to pay no taxes. It’s not only expatriates from Asian countries such as India, Pakistan, and Bangladesh who find Dubai an ideal and cost-effective place to buy gold; one can also see visitors from Saudi Arabia and Europe strike good bargains.”

The vast majority of Siroya’s customers are Indians who favor 22k gold, rather than Arabs who traditionally opt for 21k. “The emotional attributes and benefits of gold, as well as its practical or financial benefits today complement the roles of women around the world,” explains Moaz Barakat, managing director, World Gold Council, who supervises WGC operations for the Middle East, Turkey, and Pakistan.“The rise in gold prices over the past three years has not only added to gold’s desirability but has also provided a strong justification for women to buy jewelry. It has once again reiterated the universal and enduring appeal of the metal,” he concludes.

The per capita consumption of gold in the UAE is the highest in the world, an average of 30 grams per person annually, compared with the global average of less than 1 gram. This reflects the country’s passion for fine designer jewelry. Demand for diamonds and other precious stones is on the rise, with the retail value of diamond sets sold in the Gulf increasing by over $200 million since 2001. The most popular shape in diamonds is still the round brilliant cut, with color grades ranging from colorless to near colorless. Yellow and brown diamonds are also becoming popular, thanks to the grading certificates usually given with the stones.

With this in view, Diamond Trading Company, the world’s leading supplier of natural diamonds, launched Rayana, a concept in high-end diamond jewelry design created specifically for women in the Middle East. The concept of Rayana is based on extensive consumer research that reveals that Arab women want to accentuate the abundance of diamonds in their jewelry pieces. Thus, Rayana sets contain more diamonds and less gold.

Internationally, the Middle East is one of the most critical markets for diamond jewelry. According to DTC research, diamond sets account for 55 percent of all jewelry sales in the Gulf. Interestingly, the sale of diamond jewelry sets has increased by 49 percent in the last four years with most of the clientele consisting of Arabs who spend approximately $2 billion each year on the sparkling stone.

Consumers in the Emirates also buy simple, classical pendants with solitaires, gemstones, or crystals. Wide or stacked bangles remain a trend as do charm bracelets. Large rings are still popular, but in simple designs featuring big, faceted gemstones with wide bands of metal or beaded fringes and pom-poms.

Tiffany & Co. has long been known as the jeweler to royal families of the Gulf and remains popular. The City of Gold has also responded well to the Marrakech line, by D’damas, a combination of gold and diamond jewelry, crafted by the Italian jewelry house Marco Bicego. The Marrakech assortment consists of twisted metal coils with diamonds carefully laid between the metal. The collection reflects the influence of Africa’s rich visual heritage. The collection is set in 18k gold with diamonds and colored gemstones.

The Gulf is one of the world’s fastest-growing markets for top-of-the-range watches. An increasing number of upscale watch brands have established a presence in the region, which demonstrates a strong appetite for fashionable trade names. “The UAE caters not only to the local market but also to a large number of business and leisure visitors as well, which explains the country’s strong position in the international watch industry,” says Mohammed Seddiqi, chief operating officer of Ahamed Seddiqi & Sons, dealers of Baume & Mercierin the UAE. The company has a special limited-edition watch range, with only 150 of the watches being sold in Dubai for approximately $3,500. Other popular watch brands include Swatch and Clerc.

With its newfound love for diamonds, gems, and luxury watches, Dubai has emerged as a prime market for innovative jewelers.

Adapted from an article that appeared in the December 2006 issue of JCK India.