Gulf luxury sector reels as war drags on, prompting event relocations and economic slowdown

With the US-Iran war entering its seventh month, Gulf leaders have written off the remainder of the year as a loss, abandoning expectations of a quick de-escalation. Major events have been reshuffled: the Bahrain Grand Prix will be held in Malaysia, Saudi Arabia moved its E-Sports World Cup to Paris, and a Shakira-headlined UAE music festival was cancelled. European airlines including Air Canada, KLM and Lufthansa have prolonged suspensions of Dubai flights, while regional carriers continue using Iranian airspace despite missile warnings.

Dubai International Airport reported a 31% decline in passenger traffic and a 29% drop in cargo shipments in H1 2026; hotel occupancy fell to 56%, with luxury hotels hardest hit. The real-estate index lost roughly a third of its value, residential sales dropped 31% and luxury property sales fell 59%, though average home prices rose 3% in Q2. Companies such as Wynn Resorts face months-long delays and cost overruns, and the UAE has introduced $680 million in stimulus, tourist vouchers and upcoming entertainment events, though officials warn the conflict remains a destabilising factor.