The Dubai office market has seen an unprecedented surge in demand with a shortage of supply in 2024, leading to a steep rise in rental prices. This upward trend is also expected to continue into 2025. According to reports, the shortage of office space in Dubai is projected to persist until 2027-2028. The DIFC would comprise approximately a third of the supply in new offices that could be added over the next three years in this city. In any case, most of it is likely to be let even before completion.
With one of the highest in the world, the present occupancy in Dubai is 92% of office stock and is likely to be higher than 94% at the end of 2025. Office rents surged 22% year-on-year in 2024 in Dubai and are forecasted to surge further by an additional 10%-12% in 2025 on account of new business entrants’ emergence and foreign companies coming because Dubai solidifies its position among key financial, commercial, and tourist centers.
Robert Thomas, Head of Leasing at Cushman & Wakefield Core, commented:
“We are witnessing a significant surge in demand for office space in Dubai, driven by the entry of new companies into the market and the expansion of existing tenants.”
He further added:
“Although supply is relatively strong this year, most of it has been pre-leased or is concentrated in specific free zones, adding pressure to the market. Many clients are now adopting a strategic approach—optimizing their existing office spaces or exploring emerging areas like Dubai Commer City and Expo City Dubai to meet their requirements.”
In 2024, Dubai commercial real estate stretched further, specifically in office and industrial segments. Major business hubs like DIFC, Business Bay, and Downtown Dubai achieved near-full occupancy, with the former reaching 96% towards the end of the year. Up-and-coming areas, including Dubai South and Expo City, are attracting interest due to their affordability and reduced congestion, with increased availability of space.
According to the Dubai Chamber of Commerce, over 51,000 new companies have joined as members. Toby Hall, Head of Commercial Leasing at Savills Middle East, stated:
“With record-low availability of Grade A office spaces in prime areas like DIFC and upcoming supply in emerging districts like Dubai South and Expo City, the market is adapting to sustain growing demand. Robust leasing activity, particularly driven by the financial and tech sectors, highlights Dubai’s ability to accommodate international businesses and support sustainable development initiatives.”
Given this trend, the shortage of office space in Dubai is expected to continue until 2027-28 unless significant steps are taken to increase supply.
The office market in Dubai has seen a rapid increase in demand and supply shortage over the last couple of years. The trend, at an all-time high due to the arrival of international companies and rapid economic growth, saw occupancy rates rise to 92% and rentals appreciate by 22% in 2024. It is projected that this figure will go past 94% by the end of 2025, while rentals continue to rise.
In response, other areas such as Dubai CommerCity and Expo City are being marketed as alternative locations for occupiers. Meanwhile, DIFC is due to add substantial levels of new supply in 2027-2028, albeit much of this is expected to be pre-let ahead of completion.
With continued growth in both the financial and technology sectors, Dubai needs to adopt a strategic solution that can balance the supply and demand of the Dubai real estate market if it is to maintain its position as an international business hub. If not addressed, shortage of office space could remain a big challenge until 2028.
Source: https://www.propertynews.ae
