UAE, Saudi Arabia spur regional luxury market boom

Khaleej Times

2 days ago

The luxury retail landscape in the Middle East is undergoing a dramatic transformation, led by the UAE and Saudi Arabia, which have emerged as the region's most dynamic and lucrative markets for global luxury brands.
A potent mix of surging consumer demand, growing wealth inflows, and visionary urban development is creating fertile ground for the sector's robust expansion, making the region a new strategic frontier for high-end retail, luxury market experts said.
As global brands strengthen their presence and regional players scale up, the Middle East is poised to take on a more strategic role in luxury portfolios worldwide. From flagship openings to experiential innovation, the UAE and Saudi Arabia are setting the pace for the next chapter in global luxury retail, they argue.
According to the Savills Global Luxury Retail Outlook 2025, the Middle East is now firmly on the radar of international brands seeking to expand their footprints beyond traditional Western hubs. The UAE, particularly Dubai and Abu Dhabi, tops the firm's Dynamic Wealth Index, thanks to a record inflow of 6,700 high-net-worth individuals (HNWIs) in 2024—the highest global net inflow. This wealth migration is not only reinforcing demand but also shaping an increasingly sophisticated consumer base hungry for luxury experiences and products.
The region's luxury goods market is expected to generate $12.82 billion in revenue in 2025, according to Statista. Annual growth is forecast at 2.04 per cent between 2025 and 2029. The largest segment is luxury watches and jewellery, which is projected to generate $5.15 billion in 2025 alone. With per capita revenues averaging $209.81 across the GCC, the figures reflect both the region's purchasing power and its evolving role as a key player in global luxury retail. In comparison, China remains the largest global luxury market, with $110 billion in revenue forecast for the same year.
This growing appetite for luxury is being matched by ambitious retail infrastructure across the region. 'Set between East and West, the Middle East has become increasingly attractive to brands from across the globe,' said Thea Rowe, cross-border retail lead for Savills Middle East. 'With a growing base of affluent residents and strong international visitor reach, it offers a unique opportunity for luxury retail expansion.'
Jasmina Banda, chief strategy officer at Chalhoub Group, observed that the region's personal luxury market is demonstrating resilience and adaptability despite global headwinds. 'With retail sales reaching $12.8 billion and a growth trajectory that outpaces the international average, we see tremendous potential for brands to leverage this momentum. New developments are creating opportunities for brands to elevate the in-store experience to meet rising consumer expectations.'
Indeed, the emphasis on experience-driven retail is reshaping how luxury is delivered in the region. Retail developers are moving towards larger, more immersive store formats that offer curated, multi-sensory experiences designed to deepen brand engagement. This experiential approach reflects the shifting preferences of GCC consumers, who are increasingly seeking not just products but lifestyle alignment and storytelling.
The Middle East's booming food and beverage sector is also reinforcing the luxury ecosystem. Savills projects that the F&B sector will more than double in size over the next four years, with its growth synergising with high-end retail in mixed-use developments that blend shopping, dining, and leisure. These destinations are not only redefining urban luxury but also elevating consumer expectations.
However, Savills warns that the region's fast-evolving retail environment demands agility, deep local insight, and rapid execution. Developers in the UAE and Saudi Arabia often work on accelerated timelines, with full proposals required within weeks, making strategic preparedness essential for international brands. 'With limited availability and strong demand, flexibility is critical,' Rowe added. 'Protecting brand integrity remains essential, but those willing to adapt operationally will be best positioned to secure prime locations.'
Looking ahead, the outlook remains bright. Savills expects the momentum behind luxury retail expansion to continue into 2025 and beyond, driven by sustained consumer appetite, ongoing HNWI inflows, and ambitious urban transformation. Dubai is seen alongside cities like Bangkok and Kuala Lumpur as one of the top markets for dynamic retail growth, underpinned by its visitor appeal and burgeoning luxury real estate pipeline.