The GCC retail market will continue to grow, but at a pace lower than the past five years, says a report.

According to the report by Alpen Capital, a leading financial services provider, opposing forces are currently at work in the GCC retail market.

A growing population, rising tourism and huge investments into new retail destinations will encourage increased consumption, while falling equity and real estate prices, slower economic growth and reduction in consumer credit work in the opposite direction, it said.

Tommy Trask, executive director and head of equity research services at Alpen Capital, said: “We forecast that the GCC retail market will continue to grow at a nominal compounded annual growth rate CAGR of about 6.6 per cent in 2009 to 2011, a lower pace than that over the past five years, but higher than that of most developed markets.”

“GCC retailers are trading at a lower average valuation multiple than both our emerging and developed market peer groups,” he added.

“Furthermore, the GCC retailers boast a dividend yield of about 8.5 per cent, significantly higher than both their emerging and developed market peers. The report identifies interesting investment opportunities in the GCC retail industry for both short and long term investors with varying degree of risk appetite.”

According to the report, it is expected that budget retailers focused on non-discretionary products would outperform in the short to medium term as consumers tighten their budgets in view of job uncertainties and weak sentiment.

Retailers focused on discretionary luxury goods will face more challenging trading conditions in the short to medium term.

Consequently, it suggests investors with a short term investment horizon focus on the non-discretionary consumer goods segments, while foreseeing interesting long term investment opportunities emerging in the next two years in the more cyclical discretionary luxury goods segments.

“Our aim is to provide high quality, independent research on various sectors of the GCC market,” said Sanjay Vig, managing director at Alpen Capital.

“The equity research service was launched by Alpen Capital to give investors a detailed perspective on the various GCC sectors. We believe that the research will be of great interest to our clients, particularly at this time of great opportunity in the GCC equity markets,” he added. – TradeArabia News Service