As 2026 approached, the Gulf region appeared ready to become a hub for the art market. Notably, Sotheby's hosted its inaugural Abu Dhabi Collectors' Week in December 2025, generating an impressive $133 million in sales. February saw the launch of Art Basel Qatar, and the upcoming Frieze Abu Dhabi is set to make its debut in November.
However, escalating tensions following military actions involving the US and Israel against Iran have cast a shadow over these promising developments. The Islamic Republic retaliated with strikes on various Gulf nations, leading to concerns about the region's stability and reputation as a secure business environment.
The repercussions were felt immediately, with Art Dubai, a key player in the regional art scene, postponing its 20th-anniversary celebration from April to May and reducing its number of participating galleries from over 120 to just 50 due to significant withdrawals from exhibitors.
While Frieze has yet to comment on its Abu Dhabi event, the broader luxury market in the Gulf has begun to show signs of strain. Major luxury brands that previously viewed the region as a growth opportunity are now experiencing a slowdown in sales, particularly as consumer spending diminishes in Europe and Asia.
A recent report highlighted LVMH's first-quarter revenues, which fell by 6 percent to €19.1 billion ($22.4 billion), with its Fashion & Leather Goods division specifically seeing a decline. Kering Group, the parent company of brands like Gucci and Yves Saint Laurent, reported an 11 percent revenue drop and instituted a crisis management unit for its Middle Eastern operations.
Analysts predict that luxury sales in the Gulf could plummet by as much as 50 percent this year, with the art market likely following suit due to its close correlation with the luxury sector. The ongoing conflict has also increased shipping and insurance costs for artworks, with international air freight prices reportedly surging by up to 300 percent.
At the start of the year, 76 percent of art market experts identified the Gulf as a promising region for growth, citing minimal risks. However, the current geopolitical climate raises questions about whether these optimistic forecasts will hold true as the situation evolves.
