The luxury market in the Gulf Cooperation Council (GCC) region, driven by strong consumer confidence, is booming. It is growing twice as fast as the global industry and will reach a value of $12.5 billion in 2023, according to a new report by Chalhoub Group.

The report, which analyzes the luxury retail market across the GCC, highlights the positive economic outlook, with 93% of respondents feeling financially secure. 

Jasmina Banda, Chief Strategy Officer at Chalhoub Group, emphasizes the market’s strong momentum, fueled by healthy economic fundamentals, a thriving tourism sector, and optimistic consumers. Of these, 53% express confidence in the regional economy.

Consumer sentiment in Saudi Arabia is particularly strong, with 60% believing the economy has strengthened and 70% of affluent consumers reporting improvement in the past quarter. 

GCC consumers remain overwhelmingly positive despite concerns about rising living costs, environmental issues, and geopolitical tensions.

The UAE and Saudi Arabia are leading the growth surge, with high demand for high-end fashion, luxury watches and jewelry, and prestige beauty products. 

Fashion is the top sector, valued at $5.2 billion, followed closely by watches at $5.1 billion. The high-end fashion segment grew by 10% in 2023, surpassing the global average of 4%, and maintained momentum with a 7% increase in the first quarter of 2024.

The report also delves into specific segments within fashion. The ultra-high-end and high-end categories, representing 86% of the market, saw impressive growth of 11% and 6% respectively. 

The UAE has emerged as the leader across all fashion segments, benefiting from its strong tourism sector, the influx of wealthy individuals, and resilient local spending.

Beauty is another robust market in the GCC, experiencing a 15% year-on-year increase in 2023 and a further 10% rise in the first quarter of 2024. The UAE leads this sector, which is driven by domestic spending and tourism, with Saudi Arabia following closely. 

Skincare is the fastest-growing beauty category, surging by 30%. Fragrances remain the most popular beauty product among women in the GCC, followed by facial moisturizers and lip makeup.