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Slack demand at Gold Souq as Dubai Shopping Festival wraps up
By Tom Wildhern
DUBAI, February 15, 2009 - The ornate arched wooden entrance to the air-conditioned Old Gold Souq in Dubai City welcomes tourists with the slogan “Dubai: The City of Gold.”

But as the month-long Dubai Shopping Festival wrapped up on February 15, tourist demand for gold jewellery was generally slow as the global economic slowdown shut out many visitors, although the Russians, East Europeans and Gulf Arabs were still strong buyers, jewellers said.
“Many people don’t have the purchasing power to spend on gold jewellery,” said Divyesh, manager of European Jewellery, a jeweller in the Dubai Old Gold Souq which targets Western tourists with 18-carat gold and diamond jewellery.

“This year at the Dubai Shopping Festival sales are down,” he added.

Mukesh, a senior sales manager at National Jewellery L.L.C., another gold and diamond jeweller in the Old Gold Souq, echoed Divyesh’s concerns, saying demand from across the tourist spectrum had been slow this year, particularly in diamond jewellery.

“Sales of diamond jewellery have been especially slow because diamond jewellery is more expensive,” he said.

Divyesh of European Jewellery said that some tourists looked upon gold jewellery as an investment because the price of gold had risen sharply recently, due to fears over the impact of the economic downturn.
“Gold is possibly going higher because of the economic crisis,” he said. “I think it’s better to invest in gold: there is more interest in gold than in other assets at the present time.”

Jewellers at the big chain stores of Damas and Joyalukkas were more optimistic than the smaller, independent jewellers about the demand for gold and diamond jewellery, saying that buying by Russian, East European, Gulf Arab – and even Chinese – tourists had held up well during the Dubai Shopping Festival.

Damas has 14 jewellery shops in and around the Old Gold Souq, and Joyalukkas has five, with each shop catering to different market segments.

At an outlet of Damas, a leading Dubai jeweller, on the main thoroughfare that runs through the Old Gold Souq, one sales assistant, who declined to be identified, said demand had been steady, but notably from Russians who have a taste for Italian high-end brands which are available in Damas stores, such as Roberto Coin and Calgaro.

He also noted that the number of Chinese tourists visiting the Old Gold Souq was now increasing.

The Dubai Shopping Festival is a major promotion for Dubai, an international shopping hub which offers the attraction of zero tax on jewellery purchases.

Dubai has been promoting itself as the City of Gold for several years, and caters well to Indian demand for 22-carat gold at tax-free prices.

For international tourists such as the Russians who spend a lot of money on jewellery, the tax savings in Dubai can effectively pay for the entire trip as the cost of buying the same brands back home would be much higher.

Top Italian brands such as Bulgari are well-established in Moscow, and Dubai jewellers agree that Italian designs are very popular with Russian jewellery buyers.

“Russians like pearls and fancy designs and coloured stones, like blue topaz. Many Russians like Italian designs,” said James Joseph, a Joyalukkas salesman.

Joyalukkas stocks Italian-designed jewellery in its stores, including its own brands such as Florentina.

Some jewellers in the Old Gold Souq in Dubai cater specifically for Indian tastes, notably 22-carat yellow gold, while others target the Gulf Arab market. Middle Eastern customers prefer big, coloured stones,” Joyalukkas’s Joseph said.

On a recent visit to the Old Gold Souq in Dubai, Western tourists wandered up and down the thoroughfares, but footfall inside the jewellery shops appeared light. The infrastructure for Western tourists around the Old Gold Souq is basic – there is a lack of good quality restaurants, and taxis are extremely difficult to find, making life challenging for the independent tourist who does not arrive with a group tour.


Tourists are frequently approached by men whispering, “Copies of Rolex, Breitling.Good prices.”

At least they admit that the watches are fakes.

They invite tourists to go to discreet stores on side streets and then pull out displays of pirate Rolexes and Breitlings in boxes, wrapped in see-through plastic, on offer at prices far below what the genuine watches would cost.

One salesman revealed to a visitor a collection of fake Rolexes which he offered in the range of 290-380 dirhams (60-80 pounds sterling.)

The Rolexes appeared to be very good quality copies, quite heavy, apparently made of steel and, according to this salesman, manufactured in Singapore.

The fake Breitling complicated watches on offer were even more expensive than the fake Rolexes, available at 450 dirhams (90 pounds).

As the visitor walked away, declining to buy any of these fake watches, the salesman followed him out of the store and said he could offer a special, discounted deal – and then another passer-by distracted his attention.

Genuine Rolexes and Breitlings are available in the sumptuous shopping malls and in boutiques inside the most luxurious hotels in Dubai, as well as in the shopping zone at Dubai airport, for tax-free prices.