Photo: iStock
Otília Sári
06/07/2025 05:41
„Let me be surrounded by luxury, I can do without the necessities!
”
Look closer, and a different picture emerges—one of calculated strategy, global positioning, and economic foresight.
But how did luxury spending evolved in the Middle East?
Well, the reason may lie in a simple answer: through oil, the country became rich and the need for spending accelerated. Well, it’s partially true, but the answer is a bit more complex than that: the UAE has always been a key trade point in the region pre-oil era, using its maritime capabilities and natural ports to welcome merchants mainly from India, Persia, and beyond, who were the exporter of British wool, Swiss cotton, and French silks.
The story of luxury watch retail in the UAE begins with Ahmed Seddiqi & Sons, a family business run by four generations. Ahmed Seddiqi and Sons started buying luxury watches in the 1950s from watch distributors in other Persian Gulf countries, because Dubai wasn’t developed enough at that time to have its own direct distribution.[1] The family was the first in the UAE to represent Rolex in 1952 and Patek Philippe in 1960 and opening their first store in Bur Dubai Souq. These timepieces were highly desired among the elite (especially rulers and traders) and sometimes offered as diplomatic or ceremonial gifts.
Today, Seddiqi & Sons has grown into a premier luxury watch retailer, employing over 1,000 people. The brand is especially revered among local Emiratis, who remain loyal customers and view the company as a symbol of tradition and refinement.[2]
Dubai’s strategic location connecting East with West had always been an asset for the region and oil is a finite resource. The rulers of the time had clear vision on how to make a game changer infrastructure, hence my thesis reflects: luxury spending isn’t just a show — it’s strategic.
Abu Dhabi discovered oil in 1958, Dubai in 1966, however the UAE was established in 1971. Just two years later, the 1973 OPEC oil embargo caused oil prices to skyrocket, giving the UAE a financial windfall and jumpstarted large-scale development for the region. The nation used this capital to diversify its economy and launched a wave of development—ports, airports, hotels, and crucially, a world-class healthcare system.
1980s were a busy decade for the UAE. This is when Emirates Airline was established as well as the Jebel Ali Free Zone (JAFZA) with the key objective of developing the industrial and logistics activities supporting the growth of the Jebel Ali Port and encouraging companies to benefit from various attractive incentives that the Free Zone offers.[3] This initiative attracted foreign investors with global investments but with the criteria of having local ownership of more than 51%.
However, regional instability soon followed, with frequent wars in the region, revolution and political unrest. Kuwait, one of the first Gulf countries to find oil, was already considered as a welfare state by 1960s when the UAE just started discovering this powerful resource. As a result, Iraq’s invasion of Kuwait in 1990 created a huge shockwave across the Gulf. Despite the turmoil, the UAE remained untouched due to its diplomatic stance and strategic alliances. The UAE was part of the Gulf Cooperation Council (GCC), which condemned Iraq’s actions and supported international efforts to liberate Kuwait. Additionally, the UAE maintained strong relations with Western powers, particularly the United States, which stationed troops in Saudi Arabia to deter further Iraqi aggression. The UAE’s stability and neutrality reinforced its reputation as a secure economic hub in the region, however it this period served as a wake up call to accelerate economic diversification.
But what is so special about luxury?
It is said to be that the luxury industry is generally more resilient to financial and geopolitical crises than many other sectors. Usually the UHNWI – the main consumers of luxury goods - are less affected by economical downturns. What’s more, ultra luxury goods are also considered as investments and its consumption is not always a result of emotional satisfaction. Some luxury items, specifically art, watches or luxury cars can also be considered as commodity. RM Sotheby’s inaugural Dubai auction of rare cars and luxury watches achieved a remarkable US $17.38 million, with an 88.9% sell-through rate. [4]
In this context, by attracting luxury, the UAE is also attracting investors, consumers with diverse financial inputs and absorbing demand from disrupted markets. What’s more, the previously mandated rule on international businesses to require 51% local partner has been removed to accelerate the foreign brand’s entrance into the country. With this act Dubai is striving to deliver its ambitious Economic Agenda D33 to double its GDP by 2033. While brands can now enter the region
without a local partner, many still choose to work with a UAE-based entity because, without such, you are left “with no marketing support and with no real operations support. [5]
Today, the UAE’s luxury sector is anchored by four key pillars: tourism, retail, events, and real estate.
If you search on Google for the “the world’s top destinations”, I can guarantee you, that Dubai will be among the first listed. With its unmatched entertainment activities, theme parks, and diverse natural resources it one of the most desired destinations in the world. The 5-star hotels, the safety and the best-in-class service in every aspect of the country is something that’s desirable for everyone. A recent report by the World Travel and Tourism Council (WTTC) revealed that the sector contributed AED257.3 billion (US$70.1 billion) to the national GDP, accounting for 13% of the economy with international visitor spending exceeded AED217 billion last year.[6]
But also, it a shopping capital of the Middle East. Beyond transactions, shopping here is an immersive cultural experience. Malls like Dubai Mall, with over 200 luxury brands, are more than retail spaces—they’re experiential hubs. A survey done by Dubai Design District and Business of Fashion indicates that 50% of Dubai residents engaging with fashion, as one of their top three local cultural aspects.[7] In line with the Economic Agenda D33, the Design Sector Strategy 2033 seeks to establish Dubai as a global centre for design excellence, a hub for leading designers, creatives, and industry experts, and a leading destination for sharing best practices and the latest design trends.[8]
Hardly a week passes by without a major event or trade show. Whether it’s Gulfood (the region’s largest F&B trade fair), the Formula 1 Abu Dhabi Grand Prix, or fashion and jewellery showcases, the UAE’s event calendar is packed with luxury-laden spectacles. Celebrities fly in and out weekly, adding to the glitter.
Real estate had been a key driving force in the region. While it experienced a dip during the 2008 global financial crisis, it rebounded strongly. According to Finance Middle East, Dubai’s luxury residential market (properties above USD 10 million) grew by 80% year-over-year in 2023, with continued growth amid broader global uncertainty. [9]
Through visionary leadership, bold risk-taking, and savvy global branding, the city turned its relative lack of natural resources into a catalyst for innovation. According to Henley & Partners’ research Dubai is home to 72,500 millionaires, 212 centi-millionaires, and 15 billionaires making the city the highest concentration of private wealth in the Middle East.[10]
While the global macroeconomic environment continues to pose significant challenges for the luxury sector in 2025. This is largely due to the underperformance of the Chinese market, coupled with persistent economic uncertainty and political instability across major economies such as the United States, Germany, the United Kingdom, and France.
Amid these global headwinds, Dubai and the broader UAE stand out as a model of economic resilience. The strength of the UAE’s luxury market is not merely a reflection of wealth—it is the result of decades of deliberate strategic planning and positioning.
The author is a Middle East expert
[1] https://www.europastar.com/retail-world/1003675192-ahmed-seddiqi-and-sons.html
[2] https://revolutionwatch.com/ahmed-seddiqi-sons-retailers/
[3] https://www.moec.gov.ae/documents/20121/416990/Jabal+ali+free+ENg.pdf/aceaae05-4f58-21c1-e8ec-7da30f26dea3
[4] https://www.brecorder.com/news/40293631/dubai-sothebys-auction-of-rare-cars-watches-surpasses-17mn
[5] D3 x BoF study: https://dubaidesigndistrict.com/bof-white-paper
[6] https://mediaoffice.ae/en/news/2025/june/26-06/mohammed-bin-rashid-the-uae-is-among-the-top-7-global-destinations-in-international-tourist-spending
[7] D3 x BoF study: https://dubaidesigndistrict.com/bof-white-paper
[8] https://mediaoffice.ae/en/news/2024/november/07-11/latifa-bint-mohammed-approves-design-sector-strategy-2033
[9] https://www.financemiddleeast.com/features/dubai-leads-gcc-luxury-real-estate-boom-with-record-breaking-sales/
[10] https://www.henleyglobal.com/publications/centi-millionaire-report-2024/dubai-preserving-inter-generational-wealth-evolving-global-landscape