The Dubai International Financial Centre (DIFC) continues to lead as the most expensive area for office rentals in the city, with average rents reaching Dh355 per square foot, according to a recent Knight Frank report. The report also highlighted a notable increase in office lease rates in key submarkets, with a 22.4 per cent rise in the first half of 2024. The high demand for Grade A office spaces has led to occupancy levels exceeding 90 per cent and a surge in demand across the city’s top office submarkets.
To address the short supply of office space, developers in Dubai plan to add approximately 4.2 million square feet of new office space by 2028, as stated in the Dubai Office Market Review report by Knight Frank. The report also mentioned a significant increase of 19 per cent in office rental prices in the second quarter of 2024, reflecting the vibrant economic activity and growing demand for commercial spaces in the city.
Despite concerns that the pandemic would lead to a shift towards remote working, Faisal Durrani, partner and head of Research, Mena at Knight Frank, noted that demand for office spaces has surged, highlighting the importance of Grade A offices in attracting and retaining talent. The report also mentioned the ‘flight to quality’ trend in the market, with businesses willing to pay a premium for good quality office spaces, especially those with strong sustainability credentials.
Transaction volumes in the office market indicate a thriving sector, with a 24 per cent year-on-year increase in the total value of transactions in the first half of 2024. Downtown Dubai continues to dominate office sales prices, with average values reaching Dh3,609 per square foot, marking a 132 per cent increase since 2020. Adham Younis, GCEO of D&B Properties, emphasized the importance of ongoing initiatives to expand the market and provide innovative solutions to meet the growing demand for prime commercial properties and support the city’s economic growth.
The Trade Centre District follows closely behind DIFC as the second most expensive area for office rentals in Dubai, with rents at Dh350 per square foot, marking an 81 per cent increase over the past 12 months. Downtown Dubai ranks third in terms of rental prices, but is 1.5 times cheaper than the neighboring DIFC. Other areas in Dubai, such as The Greens, Sheikh Zayed Road (West), and Jumeirah Lakes Towers, have also experienced double-digit growth rates in office rental prices, exceeding Dh200 per square foot.
Adam Wynne, partner and head of Commercial Agency, UAE at Knight Frank, noted that the consultancy’s team registered 578,353 square feet of new office requirements in the first half of the year, indicating a robust sector as the supply-demand imbalance continues. The report also highlighted the emergence of ESG themes in occupier requirements, with businesses willing to pay a premium for sustainable and good quality office spaces in the UAE.
