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Gulf Countries: Long-term Growth for Tiles Market

A significant rise in construction activities in the Gulf Cooperation Council (GCC) countries has led to substantial expansion of the ceramic and porcelain tiles market.

According to a report issued by the global growth consulting firm Frost and Sullivan among the GCC countries, the Kingdom of Saudi Arabia and Qatar are experiencing an increase in demand from the building materials industry due to their long term growth plans and World Cup related ­pro­jects. As per Frost and Sullivan estimates, Chinese and European brands supply more than 50 % of the ceramic tiles demand in the GCC, followed by local manufacturers along with small portions from other countries such as Malaysia, India and Egypt. More than 25 % of the total production in the GCC is currently being exported to non-GCC countries. It has been observed that demand for cer­amic tiles is as high 70 % compared to a much lower 30 % demand for porcelain tiles. Meanwhile, the UAE (United Arab Emirates) dominates demand for porcelain tiles, as there is high market penetration due to higher customer preferences and affordability, with only 12 % of the porcelain tiles produced in the GCC currently exported to non-GCC countries as the remainder is consumed within the GCC itself. The major challenges for the tiles market in the GCC markets are a high degree of price sensitivity and the emphasis on high quality. Additionally, the availability of alternate products such as vitrified tiles is a key threat challenging the growth of the ceramic and porcelain tiles market in the GCC. According to Frost and Sullivan estimates, as high as 60 % of new buildings in the UAE now opt for vitrified tiles. However, the influx of Chinese products has forced many GCC manufacturers to target only the high-end market, as Chinese products dominate the low-end market. Augmenting local production, aggressive marketing, and leveraging the existing distribution structure will bring down imports, which is currently one of the major challenges being faced by the tiles market. Product customisation, increasing product availability through prudent sales channel and applying innovation in manufacturing to cut down cost should be short term ­focus for the industry. Most companies present in the GCC are planning to enter the porcelain supply, as distributors fetch better profit margins for imports from China. Frost and Sullivan analysis forecasts that USD 4,30 trillion would be spent on the construction sector in the GCC over the next 10 years. As a result, the tiles market in the GCC is expected to witness a positive trend and manufacturers are expected to give equal attention to both exports and the local market. Similarly, despite a low demand for porcelain owing to cost-consciousness, as the market progresses in its life cycle, penetration of porcelain is likely to increase.


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