The Middle East’s thriving luxury sector isn’t immune to the war in Iran, and CEOs of top brands have their eyes on the region.
A recent Bernstein Research report forecasted luxury sales in the Middle East would fall by 50% this month, primarily a result of a decline in traffic and tourism.
Still, it’s too early to say what the overall impact of the conflict will be, Grieder said, adding that the German designer brand has not yet seen any fallout. Executives at Prada and Salvatore Ferragamo have shared similar sentiments in recent calls with investors.
“If the war was to end relatively shortly, this would not be a huge issue for the global luxury goods in the states,” Luca Solca, senior analyst of luxury goods at Bernstein, told Fortune. “If the war was to continue, then I think if oil and gas prices were staying high, then I think there would be a higher probability of a recession.”
The expanding luxury market in the Middle East
Luxury brands have grown deep roots in the Middle East, particularly in airports in Dubai, Doha, and Abu Dhabi. According to Bernstein, Dior and Gucci, which each get 20% of sales, excluding beauty and multi-brand stores, from the region.
The wealth from these high-net-worth individuals has helped to drive the expansion of luxury sectors in the area. RBC Capital analyst Tom Narayan told Fortune these wealthier buyers are willing to splurge on the more expensive, top-of-the-line models, such as luxury supercars, making them a lucrative customer base for high-end brands.
“It’s certainly the high-margin region,” Narayan said, “meaning the cars they sell in the Middle East are more profitable versus the cars they sell outside that region.”
When luxury brands should begin to worry
To be sure, the Middle East accounted for just 4.6% of Ferrari’s 2025 global shipments, and Narayan said the automakers should be able to make up for lost deliveries in other markets, such as in Europe.
Still, consequences of a prolonged war loom. Bernstein said an ongoing conflict could throttle travel to the region, which is responsible for 30% of sales. Higher oil and gas prices, as well as concerns of a recession or fear of terrorist threats could also drive lower sales.
“Higher energy prices could potentially make global recession more likely,” Solca said. “If that materialized, then, of course, we would have a ricochet on discretionary sectors, and luxury is one of those. So we cannot take a global recession lightly.”
