According to Reuters sources, luxury brands reported a 30-50% drop in March sales at Mall of the Emirates, one of Dubai's largest shopping centers in the UAE, compared to the same period in 2025. Footfall at Mall of the Emirates, home to stores like Louis Vuitton, Dior, Gucci, Cartier, Chanel, and Rolex, decreased by 15%. Concurrently, at the larger, tourist-renowned Dubai Mall, footfall dropped by 50%.

In Abu Dhabi, March sales at Galleria mall saw an approximately 10% system-wide decline, according to another Reuters source. These figures reflect the Middle East conflict's impact on the luxury sector, as LVMH, Kering, and Hermes prepare to announce their quarterly sales.

An interior view of Mall of the Emirates in Dubai on 22/3. *Photo: Reuters*

The global luxury goods market, valued at approximately 400 billion USD, saw sales decline by 2% in 2025, according to consulting firm Bain & Company. However, the Middle East, accounting for about 5% of the market share, was a rare bright spot, recording double-digit revenue growth in recent years, according to Carole Madjo, Head of Luxury Goods Research at Barclays. "This is certainly a strategic region," Madjo added.

Thanks to low property and labor costs, coupled with higher retail prices elsewhere and virtually no taxes, Dubai is considered one of the most profitable sales points for the luxury sector. For major brands like Louis Vuitton, Hermes, or Chanel, annual revenue per square meter in Dubai can exceed several hundred thousand euro, many times the global average, according to a source familiar with Mall of the Emirates operations.

However, Dubai's carefully cultivated image of glamor and stability was shaken by the US and Iranian airstrikes that began on 28/2. Several city buildings and infrastructure, including the famous luxury hotel Burj Al Arab and the airport, were attacked by Iranian drones.

Even if the conflict ends soon, restoring shopping activity in these centers will take months, experts say. Global asset management and investment research firm Bernstein estimates the conflict's ripple effects, including rising oil and travel costs, inflation, or potential stock market declines, could "easily disrupt" consumer shopping demand.

Christopher Rossbach, a portfolio manager at J Stern & Co in London, believes the luxury sector's expected recovery from early 2026 will not materialize. "It will likely be delayed until the second half of the year or into 2027, and I don't think anyone will be surprised by that," he stated. Given the relatively small size of the Middle East market, the immediate impact of the conflict on luxury brands' Q1 revenue will be limited. However, the conflict's impact on profits in luxury firms' semi-annual reports could be much more significant, according to Rossbach.

Phien An (according to Reuters)