Dubai
If shoppers are going to hesitate spending on gold, then what chance does diamond jewellery have in the age of VAT? For UAE’s jewellery retailers, it could mean a loss of the sales sparkle they had spent years in trying to polish up.
Market sources say that diamond jewellery in the mid or more affordable price points could be worst hit in the consumer sentiments downturn in early 2018. Anything that is not deemed as investment material by shoppers in a post-VAT environment will have a hard time.
“Generally, spending of this nature falls, being more as a fashion statement than a pure a long- or short-term investment,” said Cyriac Verghese, General Manager of Sky Jewellery. “In the initial period, retailers will have to make sure buyers are getting the value for money factor, especially for those spending in ticket sizes of Dh3,000-Dh5,000.”
Cost-conscious shoppers may also find it better to put their faith in gold jewellery where making charges are typically about 8-10 per cent. That compares with the 20 per cent and more on jewellery where the cost is dominated by diamond settings.
In recent years, leading jewellery chains have been making a determined push in spreading the “diamond jewellery as investment” message. Their aim was to broaden the consumer base for this asset category rather than it be confined to those who are wealthy and are not too bothered whether they will provide sufficient returns in the longer term. Some retailers had even branched off into launching diamond jewellery collections at a lower price point.
But VAT will have upset their calculations and force diamonds to lose some of their sparkle with investors, at least metaphorically.
