Middle East shines in otherwise flat and shifting global luxury market
Global strategy consultancy Bain & Company has released its latest annual luxury goods report, with the Middle East continuing to stand out as the strongest performing regional market in the world.
Released in association with Italian luxury brand association Altagamma, the ‘Luxury Market Report’ for 2025 notes that worldwide spending is roughly on par with last year, at €1.44 trillion, but up by around 5 percent in the Middle East.
The market resilience defies persistent economic and geopolitical uncertainties, as well as a luxury consumer base now down to around 330 million frequent shoppers from a peak of 400 million in 2022, but is also undergoing a structural shift towards “experiential indulgence”.
Driven by value-conscious Gen Z consumers, that means a growing preference towards high-end hospitality, cruises, and fine dining over past trends of “conspicuous consumption”, with traditional luxury goods accounting for around a third of the total spend at €358 billion. The jewellery category was up by as much as 6 percent however, and luxury eye-wear and fragrances remain popular.
“After the shopping-spree era, experiences and emotions have become the true engine of luxury growth,” says Bain & Company senior partner Claudia D’Arpizio, who leads the firm’s global fashion & luxury practice. “The market remains resilient but not immune to macro-economic complexities. Ahead lies a phase of quality-driven growth, fueled by discipline, ethics and innovation.”
While Bain & Company expects future expansion on the retail side will favour fewer, higher-impact locations and a shift towards an experience-led model, the firm is still forecasting positive long-term growth over the coming decade, with consumer numbers growing again and the overall take projected to reach up to €2.7 trillion by 2035, including possibly €625 billion worth of personal items.
Meanwhile, the Middle East continues to be a beacon in the present-day, its luxury goods market bolstered by robust tourism in the UAE and sustained demand in Saudi Arabia. Together with Africa, Southeast Asia, India, and Latin America, the combined regions now match the ~$45 billion worth of spending in China, a market which has this year contracted by as much as 5 percent.
Underpinning its sustained growth, the Middle East is also at the forefront of catering to the changing consumer trends, in what Bain describes as a ‘tectonic’ market shift. Gourmet food and fine dining rose by 8 percent last year to now contribute ~$75 billion (though it’s unclear if Dubai chocolate is included in this category), while luxury hospitality was up by 4 percent to $250 billion.
“Luxury is no longer just about products, but about how people spend their time and with whom, with hospitality, fine dining, and tourism emerging as the brightest growth engines,” said Bain & Company partner Sami Abdul Rahman. “There’s no shortage of demand; the real question is whether supply can keep pace, and whether the region has defined an effective value proposition to entice first-time tourists.”
The consultancy concludes that luxury brands the world over now face the key challenge of re-engaging aspirational consumers while maintaining coherence. To future-proof their model, Bain says, brands must evolve from “blending with trends to shaping them,” while also weaving ethics and integrity into their proposition for a growing values-led and experience-focused market.
