The Middle East’s fast-growing luxury goods market could see a sharp short-term slowdown due to the ongoing conflict involving Iran, with a recent Bernstein Research report projecting that regional luxury sales may decline by as much as 50% in the near term due to reduced tourism and lower retail footfall.
Despite accounting for only about 6% of the global luxury market, the Middle East has been one of the sector’s fastest-growing regions, with organic growth estimated at 6–8%, according to the Bernstein report. The region’s importance to luxury brands has increased steadily in recent years, particularly as global demand in other markets has remained relatively flat.
The report noted that the region’s luxury ecosystem is heavily dependent on international travel and tourism, which contributes significantly to retail spending, especially in major shopping hubs and airport retail environments across Gulf cities. Any prolonged disruption to travel due to geopolitical instability could therefore have a disproportionate impact on sales.
Bernstein also highlighted that a prolonged conflict could create broader economic risks, including persistently high oil and gas prices, which may increase the risk of a global economic slowdown. Such conditions typically affect discretionary spending, including luxury consumption.
The growth of the Middle East luxury sector in recent years has been closely tied to rising regional wealth. According to a 2023 Oxfam report, wealth among ultra-high-net-worth individuals in the Middle East and North Africa doubled between 2019 and 2022. The report found that the wealth of the richest 0.05% of the population—about 106,000 individuals—rose by 75%, increasing from $1.6 trillion to $3 trillion during this period.
This concentration of wealth has been a key factor supporting demand for high-end goods, including luxury fashion, jewellery, and premium automobiles. The presence of a growing base of affluent consumers has encouraged global luxury brands to expand their footprint in the region.
However, Bernstein warned that continued geopolitical uncertainty, combined with possible travel disruptions and macroeconomic pressures, could slow the pace of growth if instability persists.
