Why is the UAE so influential when it comes to global luxury retail trends?

The UAE luxury goods market is highly competitive, with the presence of both global and domestic players.

Ask anyone in the world what they know about the UAE and, more often than not, the word ‘luxury’ will be mentioned sooner rather than later. Dubai in particular is globally perceived as a city replete with customised sports cars, haute couture and multimillion-dollar penthouses.

On one level, we find this attitude a little frustrating because the UAE is about so much more than surface-level ‘bling’. The Emirates is home to a rich cultural heritage, a vibrant arts scene and an?ever-growing knowledge-based economy?with a proven track record of attracting top talent from around the world. These attributes have contributed to our nation’s wealth; not resulted from it.

Nevertheless, there is certainly a kernel of truth in the international community’s perception of our nation. For decades, the UAE has helped to shape luxury retail trends on the world stage.

The size of the?UAE’s luxury market?hit USD 3.5 billion in 2021, according to data released by ResearchandMarkets.com, whereas Statista reports that?global revenue within the sector?amounted to USD 294.18 billion in the same year.

By comparing these figures, we find that the UAE accounted for more than 1 percent of overall spending within the luxury space in 2021, despite making up only 0.1 percent of the global population. What’s more, the Emirates’ luxury market is expected to achieve a compound annual growth rate (CAGR) of 6.82 percent from 2022-27, significantly outpacing the anticipated international CAGR of 5.4 percent for the same period.

However, the global players, including Rolex SA, Prada SpA, The Estee Lauder Companies Inc., Burberry Group PLC, among others, show dominance over the market.

You may be wondering whether this is simply a matter of spending power. After all, the UAE ranks 20th?in the world when it comes to?GDP per capita, recording a figure of USD 47,790 according to the latest data from the International Monetary Fund (IMF). With the Emirates positioned firmly towards the top of the international league tables, it’s not unreasonable to expect its inhabitants’ luxury spending to be higher than the global average.

But spending does not necessarily equate to influence, a factor that can be difficult to capture using figures alone. And, in my opinion, the UAE is punching significantly above its weight when it comes to luxury retail, whichever way you look at it.

One reason we can think is that UAE has played such a disproportionate role in shaping the global luxury space is its long-standing appeal to world-famous figures from the fields of business, sports and entertainment. From David and Victoria Beckham to Abhishek and Aishwarya Rai Bachchan, household names from every corner of the planet have?homes in the Emirates?– and where they go, the attention of the international media follows.

Of course, these properties are not your run-of-the-mill homes, wealthy owners have discerning tastes, and the UAE property market is uniquely placed to cater to those looking for something truly special.

Indeed, recent years have witnessed high-end real estate and luxury brands become more closely entwined through innovative collaborations such as?DAMAC’s partnerships with Cavalli?and?the luxury jeweller de GRISOGONO. Such prestigious collaborations result in stunning offerings and make Dubai?a global hotspot?for those who seek sumptuous spaces.

This sector is consistently showing great progress and no doubt this is and will show boom, setting a "golden era" for investors.