Dubai’s office market is expected to remain under-supplied until 2027-28, affecting rents as new businesses and foreign companies continue to choose the city as their location. The Grade-A office space category has seen a boost in new launches to cater to the high demand. Developers are starting to address the supply shortage by initiating new office developments according to market conditions.
The UAE, especially Dubai, has become a focus market for many international firms due to factors such as safety, zero personal tax, strategic location, robust infrastructure, and a positive environment. Asteco, a real estate consultancy, reported that the Dubai office rental market is thriving, particularly for Grade A space, due to strong demand and limited supply. The upward pressure on rents is expected to continue until new supply enters the market or business conditions change.
Data from Asteco and Cushman & Wakefield Core shows that significant office space additions are expected in Dubai in the coming months, with major developments concentrated in central areas like DIFC and Sheikh Zayed Road. Aldar recently announced plans to develop a Grade A office tower on Sheikh Zayed Road, marking their entry into Dubai’s commercial market. Occupancy levels in Grade A offices have reached 93% with further increases expected.
Global corporates often face longer lead times in making decisions due to their organisational structure and detailed due diligence requirements, according to Charlie Sargent, head of global occupier services at MRICS. In the current supply-starved market, decision-making for a project typically takes 6 to 9 months, which is imbalanced with the speed required to secure office space due to robust demand.
Average rentals have risen by 19% citywide, with areas like Bur Dubai, Jumeirah Lake Tower, Barsha Heights, and DIFC seeing the highest rental prices. Business Bay has experienced the sharpest increase in rental growth of over 64% due to intense competition for available spaces. High demand in free zones is drawing significant interest from businesses looking to establish or expand their presence in Dubai, making the market landlord-friendly and pressuring companies, especially global occupiers, to make quick decisions.
