Luxury spending in the Middle East is forecast to grow between 4 per cent and 6 per cent in 2025, led by sustained high-end demand in Saudi Arabia and robust tourism flows into Dubai and Abu Dhabi, consultancy Bain & Company said on Monday.
The outlook positions the Gulf as the strongest-performing luxury region globally next year, at a time when major markets, including China and Europe are expected to contract as consumer demand softens and travel momentum cools, according to Bain’s annual luxury market study published with Italian industry body Altagamma.
Middle East leads luxury boom
Globally, total luxury spending is expected to reach €1.44 trillion (approx. US$1.58 trillion) in 2025, broadly flat compared with last year, as the industry absorbs economic uncertainty, geopolitical disruption and shifting consumer preferences.
Bain said the Middle East’s performance is being fuelled by robust tourism in Dubai and Abu Dhabi and sustained luxury demand in Saudi Arabia, underscoring the region’s growing importance for global brands.
“After the shopping spree era, experiences and emotions have become the true engine of luxury growth,” said Claudia D’Arpizio, senior partner at Bain and lead author of the study. She said the market remains resilient but is undergoing a structural reset driven by more selective and experience-led consumption.
Spending shifts to experience-based luxury
The study found that consumers globally are increasingly shifting spending towards experiential luxury, including hospitality, cruises, fine dining and wellness, and away from more traditional luxury goods categories. This shift is described by Bain as a “tectonic” change reshaping demand across the industry.
The global personal luxury goods market is forecast to total €358 billion (approx. US$394 billion) in 2025, broadly flat year on year. Bain said ultra-wealthy consumers continue to underpin demand at the high end of the market, while aspirational shoppers have pulled back under pressure from higher prices and rising living costs.
Within personal luxury goods, jewellery is expected to lead growth this year with expansion of between 4 per cent and 6 per cent, supported by resilient demand and emotional appeal. Eyewear is forecast to grow between 2 per cent and 4 per cent, while fragrances remain the most dynamic sub-category within beauty, the study said.
Across other luxury segments, Bain said high-end cars are showing resilience while yachts and private jets continue to enjoy strong demand. Fine art markets are stalling, while design furniture is stabilising. Fine wines and spirits are delivering weak results, though premium sparkling wines and Italian reds continue to stand out.
Fragmented global luxury outlook
Regionally, the global picture remains fragmented. Luxury spending in China is expected to contract between 3 per cent and 5 per cent in 2025 as demand pivots towards more accessible local brands and experience-driven categories. Japan’s luxury market is seen decelerating after a strong 2024 due to cooling tourism.
Europe’s luxury market is forecast to fall between 1 per cent and 3 per cent this year, weighed down by slowing tourist inflows, a strong euro and geopolitical tensions. The Americas are expected to hold relatively steady with growth of between 0 per cent and 2 per cent, supported by domestic demand in the United States and expanding luxury footprints in Mexico and Brazil.
Bain said emerging regions, including the Middle East, Latin America, Southeast Asia, India and Africa together represent a luxury market of about €45 billion (approx. US$49.5 billion) in 2025, matching the size of mainland China.
The consultancy also said the global luxury consumer base continues to shrink. The number of luxury buyers has fallen to around 340 million in 2025 from about 400 million in 2022. New customer acquisition declined by 5 per cent year on year, while the share of active luxury shoppers has dropped to between 40 per cent and 45 per cent of the total addressable market.
Profitability across the luxury industry is also under pressure. Bain estimates that earnings before interest and tax margins for selected personal luxury goods brands will fall to between 15 per cent and 16 per cent in 2025, down from a peak of 23 per cent in 2012, bringing margins back to around 2009 levels.
Despite the slowdown in headline growth, Bain said the long-term outlook for luxury remains positive. Personal luxury goods are still expected to grow at a rate of between 4 per cent and 6 per cent annually through 2035, with the market projected to reach between €525 billion and €625 billion over the period, while total global luxury spending could expand to between €2.2 trillion and €2.7 trillion.
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