Dubai significantly outperforms the global average in revenue per square meter, ranking among the most profitable luxury markets. Ahead of the first-quarter results for leading global luxury brands, Reuters interviewed experts and analysts to gauge their expectations for the Middle East's performance, which accounts for 5% of global luxury goods consumption. According to a source familiar with Mall of the Emirates' performance, annual sales for major global brands like Louis Vuitton, Hermès, and Chanel could exceed hundreds of thousands of euros per square meter in Dubai, multiples of the global average. Despite facing profit pressures due to the conflict in Iran, luxury brands find Dubai highly profitable due to lower rents and labor costs, higher retail prices compared to other regions, and minimal taxes, Reuters reported. While the sector contracted after a boom that ended in 2022, the Gulf region bucked this trend, the agency noted. Since the luxury boom ended in 2022, amid China's recovery from the COVID-19 pandemic and a slowdown in growth, the combined market value of LVMH and Kering has fallen by more than 100 billion euros, over a quarter of their value. Sector-wide annual sales declined by 2% last year. However, according to Carol Magio, Head of Luxury Goods Research at Barclays, in an interview with Reuters, the Gulf region remains a strategic market for the $400 billion sector, which has shrunk over the past three years. LVMH, Kering, and Hermès are set to announce their quarterly results this week. Following LVMH, the world's largest luxury group, reporting its first-quarter sales on Monday, Kering, owner of Gucci, and Hermès will also release their results later this week. Kering will hold its capital markets meeting on Thursday. Given the Middle East's relatively small size, the direct impact of the conflict on first-quarter sales is expected to be limited, according to experts consulted by the agency.
