By Isabel Tapp, Founder of Luxury Communications Council, GCC Chapter
– No one was spared during the pandemic, least not the luxury sector. The luxury market declined during Covid and as many in Europe and around the world face a cost of living crisis and impending recession, there’s no doubt challenges lay ahead. But this isn’t the case across all markets.
The Middle East is bucking the trend with a booming economy and an increase in consumer spending compared to pre-pandemic levels. While the West has been the darling of luxury for decades, there’s been a shift to the Middle East, with brands flocking to Dubai, Doha and Riyadh to open stores and online platforms.
Between being a tax haven, tourism hub and home to high disposable incomes, the region is a key growth driver for the luxury sector.
According to the Savills Global Luxury Retail 2022 Report, this growth is largely stimulated by a young and aspiring middle-class population, hungry for luxury goods on their doorstep.
Many underestimate the role of the Middle East in the sector, but today Dubai is one of the most cosmopolitan cities in the world and incredibly important for the international market as the hub for the Middle East. So much so that Louis Vuitton chose Dubai as the third city to host its “SEE LV’s 2022 journey” campaign after China.
Plenty of room for growth
While the United Arab Emirates, and in particular Dubai, is front and centre for the region, there’s an increased appetite to explore other markets.
Saudi Arabia is fast becoming a leisure destination, as the Kingdom is investing considerable amounts in tourism. And where tourists go, so do luxury brands. In 2021, Saudi Arabia saw an increase in new store openings, where historically, Dubai was the sole focus.
Savills’ Report suggests forecasts that luxury sales in Saudi Arabia could reach $22.2 billion by 2024, reflecting an average annual growth rate of 7.2% between 2019 to 2024.
But before luxury brands jump into the market and attempt to tap into the region’s wealth, it’s critical to understand cultural nuances. The biggest challenge will be redefining luxury and connecting with the many nationalities who call the Middle East their home. This ‘new world’ creates unique luxury experiences for a future-forward generation.