Luxury hospitality and lifestyle destinations drive the next phase of luxury retail growth in the Middle East
As luxury brands become increasingly selective in their global expansion strategies, the Middle East is strengthening its position as a key destination for premium retail investment, supported by rising wealth levels, significant investment in luxury hospitality and lifestyle-led developments, and the region’s longer-term appeal as a global destination, according to Savills Global Luxury Retail Outlook 2026.
While global luxury retail expansion has entered a more measured phase, this reflects a strategic shift rather than a slowdown in demand. In 2025, total new store openings globally fell to their lowest level since 2020, as brands prioritised high-quality locations that align with their long-term positioning.
Across the Middle East, luxury retail is increasingly being shaped by a broader ecosystem that combines retail, hospitality, branded residences, dining and entertainment. This trend is particularly evident in destinations such as Dubai and Riyadh, where major investments in luxury hotels, waterfront developments and mixed-use districts continue to appeal to both international visitors and affluent residents.
The report highlights the growing influence of luxury hospitality in shaping future retail demand, with destination cities benefiting from significant luxury hotel development pipelines. This reflects a broader shift in consumer behaviour, where luxury spending is increasingly linked to experiential offerings during travel rather than traditional shopping trips alone.
Ongoing geopolitical tensions in the region are impacting air travel routes and costs, which will temper international visitor volumes in the near term. However, the medium to long-term fundamentals for the region remain compelling, underpinned by strong domestic wealth and continued investment in luxury infrastructure.
Thea Rowe, Associate Director, Middle East & Cross Border Retail at Savills Middle East, said, “The luxury retail sector is becoming increasingly focused on quality over quantity. Brands are prioritising destinations that offer access to affluent consumers, strong tourism performance and a wider lifestyle proposition, rather than simply pursuing expansion for the sake of it.
Over the years, Middle Eastern cities such as Dubai and Riyadh have evolved into global lifestyle destinations, where luxury retail is supported by world-class hospitality, branded residences, cultural attractions and a growing presence of high-net-worth individuals. This creates an environment where brands can engage consumers across multiple touchpoints and build a stronger long-term presence.”
The trend is also creating opportunities beyond established luxury retail corridors. As destination-led developments continue to emerge across the region[SS1.1], luxury brands are increasingly assessing locations based on the overall visitor experience, accessibility and surrounding amenities. Riyadh is a prime example, the city is forecast to see the largest percentage increase in luxury hotel room supply of any global market currently under construction, a pipeline that is expected to significantly strengthen its long-term luxury retail credentials alongside Dubai.
Looking ahead, Savills expects luxury retail demand across the Middle East to remain resilient over the medium to long term, underpinned by strong domestic wealth, government investment initiatives and the region’s appeal as a destination for international business and high-net-worth individuals.
“The future of luxury retail is closely linked to the destinations consumers choose to live, stay and spend time in,” added Rowe. “The most successful locations will be those that combine retail with hospitality, culture and lifestyle, creating environments that encourage longer stays and deeper consumer engagement.”