Richemont, the Swiss luxury goods holding company led by South African billionaire Johann Rupert, and LVMH Moet Hennessy Louis Vuitton, a luxury goods conglomerate owned by Bernard Arnault, the world’s richest man, are set to benefit from the Middle East, which is expected to become one of the fastest-growing markets for luxury goods in 2023.
According to recent Barclays Plc reports, the Middle East is expected to be one of the fastest-growing markets for luxury goods in 2023, with high oil prices, buoyant economic conditions, and demographic trends all contributing to this optimistic outlook, as leading cities in the region such as Dubai continue to focus on attracting tourists and foreign expatriates.
All of these factors bode well for luxury goods conglomerates such as LVMH Moet Hennessy Louis Vuitton, owner of brands such as Louis Vuitton and Christian Dior, and Richemont, led by South African billionaire Johann Rupert. Richemont is known for its Cartier jewelry and watches.
Barclays’ analysts Yasmin Clark and Carole Madjo said in the report that “the broad outlook for the region remains much more positive than for western economies, with GDP growth forecasts being revised up at a time of downward revisions for most countries globally.”
According to Barclays, the Middle East is expected to make up eight percent of global luxury goods sales by 2030, a rise from its current five-percent share. This increase is largely due to the strong economic performance of the region, particularly in Dubai, where GDP grew by 4.6 percent in the first nine months of 2022 and the city attracted almost 13 million tourists by November.
The region, particularly Saudi Arabia and Qatar, also has potential for growth in the luxury sector through increased tourism for events such as the Qatar Grand Prix and the AFC Asian Cup, as well as the opening of a luxury mall in Riyadh and a potential return of Chinese tourists to the UAE.
Richemont, which is owned and led by Rupert, a leading South African billionaire and the second-richest man in Africa, reported a double-digit increase in profit during the first half of its 2023 fiscal year, owing to higher sales as the group’s watch and luxury goods continued to shine despite widespread macroeconomic volatility and political tensions.
According to the group’s recently published interim financial statement, profits at the end of the first six months of its 2022 fiscal period rose by more than 40 percent, from €1.5 billion ($1.55 billion) in the same period in 2022 to €2.1 billion ($2.17 billion).
This strong performance follows a profit increase of 61 percent in the previous year, with profits rising from €1.289 billion ($1.36 billion) in 2022 to €2.08 billion ($2.2 billion) during the reporting period.