The Middle East contributes about 5% to 6% of global luxury sales, according to estimates by Morgan Stanley and Bank of America, and the region’s importance to the sector is now under fresh scrutiny as escalating conflict disrupts business and travel, Reuters reported.
Israeli and U.S. strikes on Iran, and Tehran’s response, have led to airspace closures across parts of the Middle East and temporary shutdowns at major hubs such as Dubai and Doha, affecting tourism-driven retail spending, the report said. As of Monday, several stores in Dubai and other major shopping centres were either closed or operating with minimal staff.
The United Arab Emirates accounts for roughly half of the region’s luxury revenues, with Dubai serving as the main commercial hub, Morgan Stanley noted in the report. Purchases in the Middle East are largely driven by tourists, particularly from Russia, Saudi Arabia, China and India.
According to Reuters, the disruption comes at a fragile time for the global luxury industry, which has been grappling with a two-year slowdown in demand. Investors had been looking to the Middle East — one of the few bright spots last year — to help offset weak recovery in China and growing uncertainty linked to U.S. tariff risks.
Analysts at Morgan Stanley warned the crisis could also dampen the traditional Ramadan shopping season, when affluent Gulf residents typically travel to Europe and other destinations for luxury purchases.
Among listed players, Cartier-owner Richemont and Italy’s Ermenegildo Zegna Group are seen as the most exposed to the region, each generating about 9% of total sales from the Middle East, Reuters reported. Burberry is considered among the least affected.
Luxury stocks have reacted sharply. The STOXX Europe Luxury 10 Index has fallen around 9% since Monday, marking its steepest two-day decline since the tariff-related market shock in April, reflecting investor concerns over the sector’s near-term outlook, the report added.
