The global luxury industry is entering a new phase of “profitable resilience,” with the Deloitte’s Global Powers of Luxury 2026 identifying the Middle East as the world’s “third-largest engine for luxury consumption growth globally,” driven by wealthy young consumers, tourism investment, and a rapid shift toward experience-led luxury.
According to the report, “Luxury executives expect 2026 to be driven less by volume and more by value,” as brands move away from aggressive expansion and instead focus on “pricing power, product mix, and operational discipline.”
The study, based on a survey of 420 senior executives across luxury sectors including fashion, jewelry, watches, beauty, and hospitality, said the Middle East’s momentum is “substantially influenced by the repatriation of high-end spending as major capitals like Dubai and Riyadh invest heavily in elevating their local retail and luxury hospitality ecosystems.”
The report added that the region’s growth reflects “a young, wealthy, and digitally engaged consumer base that increasingly appears to prefer shopping domestically rather than traveling abroad, cementing the region’s structural importance to global luxury brands.”
The Middle East accounted for 17.9% of the regions expected to drive the strongest growth in luxury consumption over the next 12 months, behind only China and Japan.
Deloitte noted that luxury executives in the Middle East remain among the world’s most optimistic. “Representing the most ambitious outlook, the Middle East reports 66.7% revenue optimism and the highest margin confidence at 80.0%,” the report said.
It attributed this confidence to “concentrated affluent demand, massive government-driven infrastructure investment” linked to initiatives such as Saudi Vision 2030 and the United Arab Emirates Tourism Strategy 2030, alongside “sustained tourism-driven retail flows.”
The report said luxury houses are increasingly treating the Gulf not merely as a retail market but as a long-term strategic ecosystem.
“In the Middle East, personal shopping lounges in department stores use data about past purchases to layout selections tailored to each VIP customer,” Deloitte said while discussing the rise of hyper-personalization in luxury retail.
The UAE emerged as one of the strongest markets globally for personalization-led luxury engagement. Deloitte found that “most consumers expect tailored products, services, and communications,” with the trend “stronger in the UAE (personalization 80.2%; connection 76.8%).”
The report added: “Personalized ads positively influence perceptions and purchase choices for 56.3% globally – peaking in the United Arab Emirates (77.2%).”
Executives also highlighted a structural shift in luxury demand away from products toward immersive experiences.
“Today’s consumers – especially younger, globally minded ones – seek immersion, storytelling, and interaction,” Deloitte said, adding that luxury brands are increasingly investing in “theatrical flagships,” cafés, galleries, museums, pop-ups, and “photo-friendly installations that turn visits into cultural events.”
The report observed that “experiential luxury now extends beyond fashion stores,” with brands opening “refined dining spaces and cafés,” staging “interactive exhibitions with AR try-ons and digital mirrors,” and creating “hybrid retail-entertainment hubs.”
Luxury travel emerged as the category with the strongest expected growth over the next 12 months, with 36.2% of executives identifying it as the sector most likely to outperform.
The Middle East’s ambitions in hospitality and tourism appear central to this shift. Deloitte said the region’s luxury outlook is being shaped by “major investments in non-oil sectors, like Tourism and Entertainment,” which are “attracting global wealth and driving high-net-worth individual tourism.”
The report further noted that luxury consumers globally “did not stop spending; they shifted what they spent on,” with experiential categories including travel and hospitality growing by 8% to $103.4 billion in 2025.
Artificial intelligence is also emerging as a key battleground for luxury brands operating in the Gulf.
Deloitte said the Middle East “shows the highest share of companies assessing adoption (50%) with pilots underway, aligned to capability building in experiential retail.”
Executives in the region also showed among the world’s highest interest in AI-driven product innovation and design. The report said the Middle East and Asia “show the highest interest in AI use in product innovation and design.”
At the same time, virtual commerce and immersive retail are expected to gain momentum fastest in the Gulf. Deloitte noted that “in the Middle East (16.7%) and South Korea (13.3%), executives express higher confidence in the revolutionary power of immersive retail formats experiences.”
Looking ahead, the report argued that luxury’s future will increasingly depend on emotional connection rather than sheer scale.
“Luxury’s future is anticipated to be won by being truer: clearer in purpose, sharper in execution, closer to the people you serve,” Deloitte wrote in the report’s foreword.
