Dubai’s office sector is witnessing robust demand, driven by both new market entrants and the expansion of existing firms. The latest data on the Dubai office landscape highlights solid fundamentals, with increased leasing activity and evolving market dynamics shaping the current trajectory.
The emirate has embarked on a fresh growth cycle, marked by surging rental rates, lower vacancy levels, and heightened competition for premium commercial spaces.
In the first quarter of 2025, Dubai recorded a remarkable 45% average annual increase in office rents across 22 sub-markets. Prime business hubs such as DIFC, Business Bay, Downtown, and TECOM are leading this uptrend. DIFC, in particular, has reached an impressive 98% occupancy rate, showcasing its continued appeal.
Grade A spaces, especially in well-connected locations, are seeing heightened interest from both regional and international companies seeking high-quality office environments.
Net effective occupier costs rose by 4.9% in Q1 2025, reflecting an uptick in overall leasing expenses that include base rents, fit-out investments, and ancillary charges. With average prime occupancy costs now at $148.9 per square foot annually, Dubai ranks eighth globally, underscoring its growing status as a strategic commercial hub for the Middle East, Africa, and South Asia.
Diversified Demand and Sectoral Drivers
The surge in office demand is largely fueled by core industries such as finance, consulting, technology, and media. Additionally, agile SMEs are gaining ground, particularly in emerging districts like Dubai South and Expo City, where cost efficiency and accessibility are key advantages.
The Dubai Chamber of Commerce’s addition of over 70,000 new companies in 2024, a 4.6% year-on-year increase, further illustrates the emirate’s growing attractiveness as a business-friendly environment.
Shifting Workplace Preferences
As companies seek versatile, well-specified office solutions, serviced workspace providers are expanding into mixed-use and community-driven areas. In established zones, the limited availability of Grade A space is prompting landlords to become more flexible, offering custom lease packages, enhanced amenities, and refurbishment initiatives to align with tenant expectations.
Landlords in areas like Business Bay are now quoting rental levels approaching those in DIFC, highlighting the growing perceived value across different parts of the city.
Renewals, Efficiency, and Future Developments
Lease renewals remain a practical choice for many occupiers, particularly in locations protected by RERA regulations, which offer greater cost stability. At the same time, companies are reassessing their space requirements, opting for layouts that support operational efficiency and adaptability over larger, less efficient spaces.
New office projects are underway, with many already securing substantial pre-leases. This trend indicates a positive market outlook, with high-quality supply likely to remain in strong demand throughout 2025.
Dubai’s office sector is not just expanding, it’s evolving. The rising rents and increasing occupier activity point to a maturing environment, where sustained interest and solid economic fundamentals continue to elevate the city’s status as a long-term base for global enterprise and innovation.
Source: https://www.arabianbusiness.com/industries/real-estate/dubai-office-rents-up-45-per-cent
