Dubai's Office Market Booms as Demand Soars

Dubai office market is seeing a surge in demand leading to higher rents and experts predict this situation will continue until at least 2027-2028. New businesses are flocking to the city and many international companies are also relocating to Dubai. This influx has created a need for more office spaces especially in the high-quality Grade A category.

Dubai's appeal to businesses is growing because of its strategic location, safety, zero personal taxes and excellent infrastructure. The city's positive business environment makes it an ideal place for companies looking to expand. Real estate experts highlight that Grade-A office spaces are in high demand which continues to drive up rents. They expect this trend to continue until more office buildings are ready.

In the second quarter of 2024, approximately 0.37 million square feet of new office space was added to the market. An additional 0.37 million square feet is expected by the end of this year. Significant new projects are underway in areas like Expo City Dubai, Dubai Internet City's Innovation Hub, and Sheikh Zayed Road. Notable developments include the Immersive Tower in Dubai International Financial Centre (DIFC) and a new Grade-A office tower announced by Aldar on Sheikh Zayed Road.

Most of the new office developments are concentrated in central areas like DIFC, Sheikh Zayed Road, Jumeirah Lake Towers (JLT), and various free zones. About 78% of the upcoming office space will be in free zones making these locations attractive for businesses due to the favourable business regulations. The remaining 22% will be in onshore areas, where the shortage of space is more severe.

The overall occupancy rate for office spaces in Dubai has reached a record 90%, with Grade-A offices at 93%. Key business areas such as Business Bay, Sheikh Zayed Road, DIFC and JLT are seeing the highest demand. In these prime locations, occupancy rates are above 95% further driving up rents.

Due to the limited supply and high demand, office rents across Dubai have increased by 19% over the past year. Areas like Bur Dubai, Jumeirah Lake Towers, Barsha Heights (Tecom) and DIFC are among the most expensive. Business Bay has seen the sharpest rent increases, with a rise of over 64% this year alone, as more companies compete for the limited available space.

As Dubai continues to attract more businesses, the demand for office space remains strong. Developers and investors are responding by launching new projects but with the current pace of demand, the market will stay landlord-friendly for some time. This makes Dubai an exciting and dynamic place for businesses looking to grow?and?expand.