Luxury retailers across the United Arab Emirates are facing a sharp downturn as escalating tensions linked to the Iran war disrupt one of the world’s most lucrative shopping destinations.

According to a Reuters report, Europe’s leading luxury brands experienced steep declines in sales across Dubai and Abu Dhabi during March, reversing what had been a strong growth trajectory for the region. At Mall of the Emirates, luxury outlets reported sales dropping between 30 and 50 percent compared with the same period last year, while overall visitor numbers declined by roughly 15 percent.

The impact appeared even more severe at Dubai Mall, where spending is heavily dependent on international tourists. Foot traffic there reportedly fell by about half, pointing to a significant contraction in retail activity at one of the world’s busiest shopping destinations.

Abu Dhabi’s high-end retail sector showed slightly greater stability. Sales at The Galleria on Al Maryah Island declined by around 10 percent, suggesting that local demand helped cushion the downturn despite regional uncertainty.

The Middle East had remained one of the few reliable growth engines for the global luxury industry after weaker recovery in China and slowing consumer demand worldwide since 2022. Analysts now warn that the ongoing geopolitical crisis has delivered another blow to a sector valued at roughly $400 billion, which already recorded an overall sales decline last year.

Experts caution that even if diplomatic tensions ease soon, a rebound in Gulf shopping hubs may not happen immediately. While the region represents only a small share of global luxury consumption, it remains among the most profitable markets for premium brands due to tax advantages, strong tourism flows, and exceptionally high retail productivity.