Global Supplier Directory
Supplier Solutions
Whitepaper Library
Calendar of Events
Association Locator
Contents Pages
Market Research
Subscription Center

issue: January 2007 APPLIANCE Magazine

55th Annual Appliance Industry Forecast: Middle East
Mid East Appliance Boom

 Printable format
 Email this Article

by Adite Chatterjee, India Correspondent

Several thriving economies in the Middle East are experiencing a booming housing market, which in turn creates substantial appliance industry opportunities.

The Middle East generally witnessed a better than average economic growth rate during 2006—at 6-7 percent—compared to global economic growth.
Economic growth in the Middle East came despite the deteriorating security situation in some countries. According to the International Monetary Fund (IMF) September 2006 Regional Economic Outlook for Middle East and Central Asia, “The region’s fiscal and external surpluses are rising, but at a slower pace than in recent years.”
Some of the factors responsible for the above-average economic performance, according to the IMF, are high oil prices, a favorable global environment and generally good economic policies. As a result, the Gulf Cooperation Council (GCC) countries—UAE, Saudi Arabia, Kuwait, Oman, Qatar, and Bahrain—recorded strong GDP growth, strengthened their external and fiscal positions, built up their foreign exchange reserves, and witnessed falling debt levels.
Though escalating conflict and a worsening security situation are likely to impact the region’s economy in the future, many oil-exporting countries in the Middle East are optimistic and have begun to increase their outlays on infrastructure. The GCC countries have plans to invest nearly U.S. $700 billion between 2006 and 2010 in sectors such as oil and gas, infrastructure and real estate. Such investments are likely to enhance growth and employment.
Even non-GCC countries like Jordan, Morocco and Egypt recorded robust economic growth in 2006. The better performance of these countries is “partly due to oil revenues being funneled into the wider region” through higher remittances, increased inter-regional tourism and higher investment levels, according to a Standard Chartered Bank (SCB) Economic Update published in August of 2006.
These factors have influenced private consumption in a number of countries. For instance, remittance outflows from Oman have increased by 23.7 percent year on year in 2005 to $1.8 billion, according to the SCB. Similarly, expatriate remittances were estimated to reach $15.8 billion by the end of 2006 from $14 billion in 2005.
Economic reforms as well as reduction in oil subsidies in Egypt and Jordan have improved the investment scenario in these countries. Moreover, such moves are expected to increase foreign direct investment to the region, and improve employment opportunities especially in labor-intensive sectors.
In Saudi Arabia, for instance, private and foreign capital investment in the hydrocarbon and power and water sectors is expected to give a huge boost to infrastructure. As many as 10 new independent water and power plants will become operational by 2016. Infrastructure improvement is also expected to give a big boost to foreign direct investment.

Outlook 2007

The outlook for 2007 is also positive. Analysts at SCB expect the region’s economy to grow at a compounded average growth rate (CAGR) of 8.1 percent from 2005-2010. For the GCC countries, the forecast is 7 percent.
Among the key reasons for this positive outlook, according to an earlier SCB Economic Update (June 10, 2006) are favorable demographics, higher oil prices, an increased focus by the governments on financial sector development (especially in the UAE, Qatar and Saudi Arabia), and more emphasis on inter-regional development.
Surging business confidence supports the optimistic outlook. According to a survey by PriceWaterhouseCoopers and Dubai-based Moutamarat, 83 percent of 140 senior executives in 14 countries in the Middle East expect business to improve further in 2007.
“Financial services are booming and the new Dubai International Financial Center and Qatar Financial Center, with world-class regulatory environments, show that this is more than a mere passing bubble,” reported Middle East business information Web site, AME Info. The healthcare sector too has been on an upswing, with higher levels of government funding and more private investment in health insurance. The region is touted as one of the world’s fastest growing markets for travel and tourism, which flies in the face of global television reportage focusing on strife, conflict and unrest in the region. The performance of these sectors has given a boost to employment opportunities for the local youth.

Housing Boom

The boom in property development, which began in Dubai, has now spread to Doha, Abu Dhabi, Beirut, and Jeddah.
“Real estate is a key driver of consumer spending, which is now emerging to challenge oil revenues as the main source of GDP in some countries,” reads an AME Info editorial. The development of King Abdullah City, near Jeddah, in Saudi Arabia, with nearly $26 billion being invested in setting up residential, industrial and service complexes, is an indicator of the country’s optimistic outlook.

Annual Appliance Growth: 30-40%

The home appliance industry is finding big opportunities in the real estate boom. The home appliance sector in the United Arab Emirates is estimated at $680 million and is expected to grow at an annual rate of 30-40 percent over the next 5 years according to the chief executive of Mohammad Hareb Al Otaiba Group.
Nearly 80 percent of the appliances are sold directly to development projects, as builders now prefer to offer fully equipped kitchens in new homes and commercial premises.
Consider Easa Saleh Al Gurg Group, whose home appliance division, Better Life, has won contracts to equip more than 6,000 apartments in the United Arab Emirates with built-in appliances, according to AME Info. For Better Life, this translates into a 170 percent increase in its projects business over the last year. Better Life represents major global appliance brands such as Siemens and Zanussi, and the company expects the segment of built-in appliances to grow significantly with changes in lifestyle.

Growing GDP

GDP per capita has been growing across most countries in the region. According to data from Euromonitor International, the UAE had the highest GDP per capita ($22,899), followed by Kuwait ($21,463), Jordan ($17,060), and Saudi Arabia ($10,544) in 2004. Kuwait’s per capita GDP grew a spectacular 67 percent during the 1994-2004 period compared to Algeria’s 54.2 percent, Turkey’s 50.8 percent and Saudi Arabia’s 33.1 percent.
Not surprisingly then, Saudi Arabia and the UAE continue to be the premier markets in the region for a variety of consumer products.
Take, for instance, the TV market. Globally the sales of LCD TVs is growing and, in 2009, LCD TVs are expected to outstrip sales of CRT TVs. A similar trend is expected in the Middle East LCD TV market. According to BenQ, the region’s leader in digital lifestyle products, the Middle East will witness 226-percent growth in the LCD TV market with total units shipped expected to rise from 150,000 currently to 450,000 units by 2009.
Currently the market is dominated by 32-inch screens, followed by 26-inch screens, but 40-inch screens are likely to dominate in the future. BenQ expects TV sales to grow by more than 66 percent year on year till 2009.

OEMs See the Potential

“The Middle East market is one of the fastest-emerging regions in the world,” said Samsung President and CEO for Middle East and Africa, Chiwon Suh.
Samsung rival LG Electronics is also increasingly focusing on its Middle East business and, according to its president for Middle East and Africa, LG was well on course to surpass its 2006 regional sales target of $2.7 billion as of press time. LG’s performance has been impacted by the spectacular 217-percent growth of its LCD TV business in 2006 over 2005, as well as the 62-percent growth in its GSM handset sales.

Appliance sales in the region are expected to grow at a hectic pace. Demand for luxury home appliances and built-in kitchen products in the Middle East will boom thanks to high per capita income and the growth in retail and real estate markets, according to Ajai Dayal, general manager, retail and marketing, Easa Saleh Al Gurg group. The increasing number of higher-income expatriates in the UAE is also driving the premium segment of the market. As a result, advanced-technology, multi-functional appliances are in great demand.
Technology is likely to play a big part in the future. Consumers in the Middle East have been known to be big spenders on technology products. A global survey by Synovate found that having the latest technological gadget is especially important to a majority of consumers in Saudi Arabia (87 percent), Romania (65 percent), India (60 percent), and the UAE (43 percent). The study had 5,500 respondents in several countries. It reports that 68 percent of Saudis said that they couldn’t live without their mobile phones. In the UAE, 52 percent of respondents felt the same way.  In fact, the survey shows respondents in the UAE and Saudi Arabia cannot live without technological gadgets in general.
Synovate’s managing director for the Gulf said the survey found that affluent consumers across the Middle East are feeling confident and spending freely on high-end products, and Saudi consumers are the most eager “early adopters”— 51 percent purchase new-technology products as soon as they are launched.
Of course, there are some Middle East nations in which the economies are struggling to grow and the population is struggling simply to survive.  Still, the region does have stable, thriving markets where the appliance industry will find plenty of opportunity in 2007 and beyond.


Daily News


Dec 22, 2014: DOE's Building Technologies Office releases Roadmap for Emerging HVAC Technologies

Dec 19, 2014: Whirlpool Corp. provides guidance for 2015

Dec 19, 2014: Panasonic to showcase built-in appliances at LivingKitchen 2015

Dec 19, 2014: New residential construction in November 2014

Dec 19, 2014: 2014 U.S. steel production up 0.7% from 2013

More Daily News>>

RSS Feeds
Appliance Industry
Market Research


November 2014: Appliance Magazine Market Insight Annual Subscriptions
November 2014: U.S. Appliance Industry: Market Value, Life Expectancy & Replacement Picture 2014
October 2014: Portrait of the European Appliance Industry
September 2014: Appliance Industry Focus: HVAC

Contact Us | About Us | Subscriptions | Advertising | Home
UBM Canon © 2014  

Please visit these other UBM Canon sites

UBM Canon Corporate | Design News | Test & Measurement World | Packaging Digest | EDN | Qmed | Plastics Today | Powder Bulk Solids | Canon Trade Shows