Dubai luxury sales reportedly plunge 30–50%, challenging Gulf’s safe‑haven status
Luxury spending in Dubai has fallen sharply, eroding the Gulf’s reputation as the industry’s last reliable growth engine, according to a Reuters analysis published as Europe’s blue-chip groups report quarterly results. Sales for the largest European houses were down by 30 to 50 percent in March at the Mall of the Emirates in Dubai, while footfall at the Dubai Mall reportedly dropped by 50 percent, the analysis said.
The slump was linked to geopolitical tensions with Iran. For years, companies such as LVMH, Kering and Hermès presented the Middle East as a resilient counterweight to a slowdown in China. That view is now being tested.
Dubai’s role as a re-export hub and shopping destination for Russian, Indian and European clients magnifies the impact, while instability tied to tensions between Iran, Israel and the United States is chipping away at the United Arab Emirates’ image as a secure bubble, the report noted.
Although the Middle East accounts for only about 5 percent of global luxury consumption, its marginal contribution to growth has been crucial. Carole Madjo, an analyst at Barclays, said it had been one of the few regions delivering double-digit growth in recent years.
Seeing it falter deprives the sector of a “plan B” while China’s recovery remains uncertain.
Analysts at Bernstein, cited by Reuters, warned of a broader domino effect beyond the Gulf: a sustained rise in oil prices weighing on household morale, including in the United States; higher airfares and insecure routes hindering travel retail; and a diminished wealth effect as market volatility curbs spending by so‑called aspirational customers.
The timing is sensitive for Kering, which is holding its Capital Markets Day in Florence this Thursday. The Reuters analysis suggested Luca de Meo will undoubtedly have to answer darker questions than anticipated about the group’s geographical diversification.
As for LVMH, the group managed to limit the damage this quarter, but experts cited by Reuters said any return to normality will take months, dampening hopes for a solid recovery in 2026. The picture that emerges is not merely of a cyclical slowdown but of a forced reorganisation of where the luxury sector earns its profits, with the Gulf no longer the straightforward stopgap it seemed.