MILAN — The Middle East conflict — the largest in scale since the Iraq War in 2003 — has rocked global equity markets and energy, shipping and commodity prices.

For the home and interiors industry, the ongoing conflict in the Middle East and disruptions in the Strait of Hormuz have cast a shadow over the prospect for the global design and interiors market, which had heavily invested in cities like Riyadh and Dubai as key growth hubs.

Signs of Decline

Home to the lion’s share of the world’s luxury design firms, Italy’s wood and furniture supply chain said companies reported a decline in the first quarter of 2026. Valued at 4.4 billion euros, exports fell 5.2 percent in the initial three months of 2026, dragged down by the ongoing conflict. In March alone, exports to the Middle East plunged by 48.8 percent.

“The sharp slowdown in the United States, together with difficulties in Germany and France, is reducing momentum in our key markets,” said Claudio Feltrin, president of FederlegnoArredo, in a note in July. “This is compounded by the impact of the conflict in the Middle East, a strategic region where exports fell 23.4 percent in the first quarter. The initial signs of recovery recorded in April in OPEC [Organization of the Petroleum Exporting Countries] countries are encouraging, but the overall picture remains fragile and uncertain.”

Exports from Italy to the United Arab Emirates plunged 78.5 percent and Saudi Arabia dropped 57.3 percent.

Forging Ahead, Retail Openings

For interior design and decor firms, leaders continue to evaluate the situation while forging ahead with expansion plans.

Kartell, the contemporary Italian family-run firm that has been making design-forward plastic furniture and more since the 1960s, said in July that it was steadfast in its plans for the Middle East.

The firm said that it plans to open in Riyadh, Saudi Arabia, by the end of the year, following key openings already this year in New Delhi; Cape Town; Brussels; Buenos Aires; Quito, Ecuador; and Lugano, Switzerland.

“The expansion will continue in the coming months with the opening of the new flagship store in Riyadh, one of the most significant milestones in the brand’s international strategy,” the brand said in a statement. A spokesperson for Kartell added that the Riyadh opening is slated for the fall of 2026 and that the new flagship will be positioned within the King Abdullah Financial District, also known as the KAFD, shopping area.

Minotti, known for its sleek furniture designs by Rodolfo Dordoni, Hannes Peer and Marcio Kogan, opened its doors in downtown Riyadh in October — a 6,673-square-foot space in KAFD, the same place where fellow Italian design company Molteni&C is expected to open its showroom later this year.

Giorgetti said it remains committed to the region and it is also forging ahead with plans to open in Riyadh in 2026.

“The Middle East is a market with enormous potential, and it is important to invest there to increase the understanding of Italian design, in particular, among the people who live and work in that region,” said Giorgetti’s chief executive officer Giovanni del Vecchio in an interview. Del Vecchio added that the conflict was reflected in its results at the start of the year, though its sales accelerated from March onward.

“Our business is closely linked to real-estate development. At the start of the year, slower property development — especially in Dubai — caused a slowdown, but that is now rebalancing. Today, our Middle East results are broadly positive compared with last year.”

Contract Business, the Silver Lining

Surprisingly, firms like historic French home textiles maker and furniture maker Pierre Frey said the conflict has benefited their contract business. Hotels in Dubai and Abu Dhabi have decided to revamp their properties amid low occupancy rates.

“The hotel projects have compensated for the slump in the rental market,” said Pierre Frey CEO Vincent Frey, who said the firm saw its sales grow in the first half of the year.

Fabric activity comes at the end of the project — once the house is built or restaurant is going to open, the curtains and sofas are the last thing you order, he said.

“I don’t know what the rest of the year will be like but we registered  14 percent growth in the Middle East year-on-year in the first half,” he told WWD.

Trade Events

From a trade perspective, the conflict has delayed key events.

Organ­izers across key regional design hubs — Beirut, Dubai, Doha and Riy­adh — have told WWD that major design events are still mov­ing for­ward, even as the U.S. and Iran con­flict impacts travel and security across the Gulf.

The next edi­tion of Dubai Design Week is sched­uled for Nov. 3 to 8, with its anchor fair Down­town Design run­ning Nov. 5 to 9. The event remains cent­ral to the region’s grow­ing design and fur­niture sec­tor, which is pro­jec­ted to reach $35 bil­lion by 2031, accord­ing to Mordor Intel­li­gence.

Down­town Design dir­ector Mette Degn-Christensen said demand for design in the region con­tin­ues to deepen, with Dubai increas­ingly at the cen­ter of that momentum. She poin­ted to Art Dubai’s 20th anniversary edi­tion, which drew more than 25,000 vis­it­ors in May des­pite the con­flict, with insti­tu­tions trav­el­ing from Seoul, Cape Town and New York. “That’s what for­ging ahead means to us: not react­ing to a single sea­son, but stead­ily build­ing an industry, with Dubai as its nat­ural home in the region,” she said.

The tim­ing of the U.S. and Iran con­flict drove Design Doha Bien­nale organ­izers to post­pone from April to Nov. 5. The first event, staged in 2024, was a suc­cess, organ­izers said. The Msheireb Down­town Doha expos­i­tion cen­ter wel­comed 118,000 vis­it­ors, includ­ing nearly 4,000 inter­na­tional buy­ers and industry lead­ers. The event gen­er­ated an eco­nomic impact of $17 mil­lion and reached 45.6 mil­lion people across vari­ous chan­nels.

Fahad Al Obaidly, act­ing dir­ector of Design Doha, said that excite­ment around the event remains strong. Museums, cul­tural insti­tu­tions and design­ers are pro­pos­ing projects rather than wait­ing for invit­a­tions. “That says a lot about how the event has evolved,” he said, adding that another major inter­na­tional draw is the Design Doha Forum and the new Design Doha Prize, a pres­ti­gi­ous bien­nial award recog­niz­ing out­stand­ing design tal­ent from across the MENASA [Middle East, North Africa, and South Asia] region.

“The ambi­tion isn’t simply to cre­ate a busy cul­tural cal­en­dar; it’s to demon­strate how design can activ­ate an entire neigh­bor­hood and leave a last­ing leg­acy after the event closes,” he said.

In Riy­adh, Salone del Mobile.Mil­ano is still expec­ted to stage its first event in the Saudi cap­ital from Nov. 26 to 28, at King Abdul­lah Fin­an­cial Dis­trict, though organ­izers have yet to issue an update on whether or not they will pro­ceed with the Novem­ber date. The event is expec­ted to fea­ture lead­ing lux­ury design brands includ­ing Mol­teni&C, Cas­sina, Porro, Poli­form, Minotti, Gior­getti, Vis­ion­naire and Artemide.

The Long-term Game

Looking ahead, market experts at Savills expect luxury retail demand across the Middle East to remain resilient over the medium- to long term, underpinned by strong domestic wealth, government investment initiatives and the region’s appeal as a destination for international business and high-net-worth individuals.

This creates an environment where brands can engage consumers across multiple touch points and build a stronger long-term presence, explained Savills Middle East & Cross Border Retail associate director Thea Rowe in a recent report.

“The luxury retail sector is becoming increasingly focused on quality over quantity. Brands are prioritizing destinations that offer access to affluent consumers, strong tourism performance and a wider lifestyle proposition, rather than simply pursuing expansion for the sake of it,” she said.

Riyadh, for example, is expected to see the largest percentage increase in luxury hotel rooms of any global market currently under construction, a pipeline that is expected to significantly strengthen its long-term luxury retail credentials alongside Dubai, the report explained.

“The future of luxury retail is closely linked to the destinations consumers choose to live, stay and spend time in,” added Rowe. “The most successful locations will be those that combine retail with hospitality, culture and lifestyle, creating environments that encourage longer stays and deeper consumer engagement.”