RIYADH: The Gulf region’s luxury sector is growing twice as fast as the global industry, reaching $12.5 billion in 2023, driven by strong macroeconomics and flourishing tourism, a new report revealed. According to the findings by luxury goods retailer and distributor Chalhoub Group, further growth is anticipated, bolstered by projected robust economic reforms set to enhance the market due to high consumer confidence. In its analysis of the Gulf Cooperation Council luxury retail market, the group noted a positive outlook on the regional economy, reflected in consumers’ personal finances, with 93 percent of respondents claiming to be doing well financially. Jasmina Banda, chief strategy officer at Chalhoub Group, said: “The region’s luxury market is expected to continue its impressive growth trajectory, driven by strong macroeconomic fundamentals, a thriving tourism sector, and dynamic consumer behavior with 53 percent of GCC residents expressing optimism about the state of the economy.” In Saudi Arabia, 60 percent of respondents believe the economy is stronger, with 70 percent of affluent consumers reporting that the economy has improved over the past three months. Despite concerns about the rising cost of living, environmental factors, and geopolitical issues, GCC consumers predominantly express positive feelings, citing hopefulness, happiness, and confidence as their top emotions, the report added. Banda added: “This ongoing growth and dynamism is underpinned by numerous new openings including those of “new luxury” brands such as Zimmermann in Mall of Emirates and Jacquemus in Dubai Mall, pop-ups inside and outside of malls, and events happening across the region.” The UAE and Saudi Arabia are boosting the region’s growth with high-end fashion, luxury watches and jewelry, and prestige beauty products witnessing significant demand. Fashion, valued at $5.2 billion, leads as the largest sector within the GCC luxury market, closely followed by watches at $5.1 billion, according to the report by Chalhoub Group. The high-end fashion segment alone grew by 10 percent in 2023, significantly outpacing the global average growth rate of 4 percent, and maintained strong momentum with a 7 percent increase in the first quarter of 2024, compared to the same quarter last year. The ultra-high-end and high-end segments, representing 86 percent of the total luxury fashion market, saw growth rates of 11 percent and 6 percent respectively from the previous year. The UAE has emerged as the leading market across all high-end fashion segments, including ultra-high-end, high-end, aspirational, and accessible luxury. This dominance is attributed to the Emirates’ tourism sector, the influx of high-net-worth individuals, and resilient local spending. The beauty category within the GCC is also experiencing robust growth. The sector saw a 15 percent year-on-year increase in 2023 and a further 10 percent rise in the first quarter of 2024. The UAE leads the market in prestige beauty, driven by strong domestic spending and healthy tourism, with Saudi Arabia following closely. Within the prestige beauty market, skincare has emerged as the leader in terms of growth, achieving a 30 percent increase. Mid-range and limited-distribution brands were the fastest-growing segments within skincare, while high-end and prestige brands grew at a slower pace. Fragrances remain the most purchased beauty product by females in the GCC, accounting for 48 percent of this market, followed closely by facial moisturizers and lip makeup. Key factors influencing beauty product purchases include good value for money, clean ingredients, and ease of use, the report stated. To enhance the shopping experience, consumers emphasize the importance of personalized services and convenience. According to the report, two-thirds of consumers actively seek guidance for fashion purchases, whether from personal stylists or in-store sales assistants. “The insights provided by Chalhoub Group highlight the GCC’s pivotal role in the luxury market’s evolution. With strong performance across various segments and countries, the region is poised for sustained growth and innovation in the years to come,” the report stated. Established in 1955, Chalhoub Group is a Dubai-based luxury goods retailer and distributor with eight owned brands and over 300 international brands.