According to analysts, since the outbreak of the Iran War, the share prices of major global luxury goods companies have fallen by 15% or more. Furthermore, in the Middle East—a market of growing importance within the global luxury sector—sales are projected to decline by as much as 50%.

So far this month, the share prices of LVMH and Hermès have dropped by approximately 16% and 20%, respectively; in comparison, the S&P 500 Index has declined by less than 6%. Ferrari’s stock price has also fallen by 15%, and the company has officially announced that it will temporarily suspend product deliveries to the Middle East region. In addition to Ferrari, other high-end automakers—such as Bentley and Maserati—have also halted deliveries to the region due to security risks and logistical disruptions.

During the company's recent investor conference call, Bentley CEO Frank-Steffen Walliser stated: "At present, production has not yet been affected. However, it is certainly safe to assume that people in the Middle East currently have little inclination to think about purchasing a new Bentley."

For investors and luxury goods companies alike, the outbreak of the Iran War has further underscored the critical importance of the Middle East region within both the global luxury industry and the broader economy of high-net-worth individuals. Although the region accounts for a relatively limited share of total global luxury sales, its growth momentum has played a pivotal role in driving the development of the entire industry.

Luca Solca, a luxury goods analyst at Bernstein, noted that last year, the Middle East was the fastest-growing luxury market globally, maintaining a growth rate between 6% and 8%, whereas the global luxury market as a whole remained largely flat. Solca further noted that luxury goods sales in the Middle East currently account for approximately 6% of the global total; in the future, the region is expected to catch up with Japan—which currently accounts for around 9% of global luxury sales.

Research data from Morgan Stanley indicates that Dubai in the UAE serves as the primary engine for growth in the Middle East's luxury market, contributing approximately 80% of the growth within the UAE's luxury sector—while the UAE itself accounts for more than half of the total luxury market growth across the entire Middle East region.

Notably, the instability in the Middle East coincides with a critical developmental phase for the global luxury industry. Following two years of stagnant sales, the industry had been pinning its hopes on a recovery in 2026. Within this context, the Chinese market has shown a modest rebound in sales following years of decline; demand among U.S. luxury consumers remains robust, bolstered by wealth accumulation driven by the growth of the AI industry and a rising stock market; meanwhile, the European market has remained stable, partly due to consumption growth driven by the tourism sector.

In a research report, UBS luxury analyst Zuzanna Pusz and her team noted that investor sentiment regarding the luxury market is currently "at its most pessimistic level in years." Although investors had bet on a rebound in the luxury market at the beginning of the year, "heightened geopolitical uncertainty could exert pressure on short-term earnings and delay the long-awaited fundamental turnaround."

The continued volatility in share prices has resulted in a combined loss of approximately $100 billion in market capitalization for major global luxury companies; among them, LVMH and Hermès suffered market cap losses exceeding $40 billion each, making them the two most heavily impacted firms.

Solca analyzed that if luxury sales in the Middle East were to drop by half in March—a scenario he termed the "worst-case scenario"—then the quarterly growth rates for many luxury companies would decline by approximately one percentage point.

However, Solca also suggested that the actual magnitude of the decline might be relatively moderate. While stores and shopping malls across the Middle East may appear largely deserted, many luxury companies are still managing to sustain sales by engaging in one-on-one interactions with key core clients and offering services such as home delivery. Furthermore, Solca noted that wealthy individuals departing Dubai may continue their luxury spending in other countries, a trend that would, to some extent, mitigate the downward pressure on the market.

Solca stated: "Most of the companies we have engaged with have not really indicated that the Middle East is facing a catastrophic decline. Ultimately, if this situation is confined solely to the month of March, it will essentially have negligible impact."

The core advantages that previously drove growth in Dubai’s luxury market—such as the absence of personal income tax, government stability, and premium sun-and-sand tourism assets—remain intact today. Data from Henley & Partners reveals that since 2014, the number of millionaires in Dubai has doubled, now exceeding 81,000. The consultancy projects that by 2025, 9,800 millionaires will have relocated to Dubai, bringing with them a combined wealth of $63 billion—a volume surpassing that of any other country in the world. Dubai’s wealthy demographic primarily hails from the UK, China, India, as well as other parts of Europe and Asia.

However, the volatility of the situation in the Middle East has shaken Dubai’s reputation for safety. The Middle Eastern luxury market relies heavily on affluent tourists; even if a ceasefire agreement is reached in the future, these visitors may steer clear of the region for an extended period, thereby exerting a sustained impact on local luxury consumption.

According to data from Morgan Stanley, approximately 60% of luxury spending in the UAE is generated by tourists—60% of whom originate from Russia, Saudi Arabia, China, and India. The remaining 40% of spending comes from local UAE residents; roughly half of this segment consists of expatriates residing in the UAE—a demographic that may also adjust their long-term residency plans in response to shifting geopolitical conditions, thereby influencing demand for luxury goods.

Moreover, rising oil prices could exert additional pressure on luxury sales. Analysts point out that luxury consumers who are more sensitive to inflation and economic slowdowns may curtail their spending on luxury goods as the cost of living—specifically expenses such as gasoline and food—continues to rise. Concurrently, stock market volatility could dampen the consumer confidence of wealthy individuals. Given that the spending behavior of the affluent is more closely tied to stock market performance and the so-called "wealth effect," a decline—or even stagnation—in the stock market could trigger a pullback in their luxury consumption. Solca commented on this: "Rising oil prices could trigger a downturn in global stock markets, which would be extremely detrimental. The consumer confidence of wealthy stock market investors would take a hit."