Dubai is further strengthening its role as a global hub for luxury retail, as international brands continue to focus on high-value destinations that combine shopping with hospitality, lifestyle and tourism, according to a new industry report.
The latest Global Luxury Retail Outlook 2026 by Savills highlights that the Middle East is becoming a key destination for premium retail investment, with Dubai and Riyadh standing out as leading markets.
Selective expansion
The report notes that global luxury brands are becoming more selective in their expansion plans. In 2025, new luxury store openings fell to their lowest level since 2020 as companies focused on fewer but higher-quality locations that match long-term brand positioning.
This shift is seen as a strategic move rather than a decline in demand.
Lifestyle destinations
In the Middle East, luxury retail is increasingly part of a wider lifestyle ecosystem that includes hotels, branded residences, dining and entertainment. Dubai and Riyadh continue to attract major investment in luxury hospitality, waterfront developments and mixed-use districts.
The report also points to the growing role of tourism in shaping retail demand, as more luxury spending is linked to travel experiences rather than traditional shopping alone.
Travel and outlook
Geopolitical tensions in parts of the region are affecting air travel routes and costs, which may impact visitor numbers in the short term. However, Savills says the medium to long-term outlook remains strong, supported by domestic wealth and ongoing investment in luxury infrastructure.
The report adds that destination cities with strong luxury hotel pipelines are likely to benefit from increased demand as retail and hospitality continue to overlap.
Beyond established retail areas, new destination-led developments are creating fresh opportunities for luxury brands. Riyadh, in particular, is expected to see the largest percentage increase in luxury hotel room supply among global markets currently under construction, strengthening its position alongside Dubai.
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.”
She added: “The future of luxury retail is closely linked to the destinations consumers choose to live, stay and spend time in. 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.”
tanvir@dubainewsweek.com
