In the first half of 2024, average office lease rates in Dubai’s major submarkets increased by 22.4% due to rising demand and limited supply.
Global property consultant Knight Frank reports that there has been a surge in demand and limited supply across the city’s top office submarkets, with Dubai Grade A office occupancy levels currently surpassing 90%.
The property consultant stated in its Dubai Office Market Review report that in order to address the shortage of office space, developers intend to add about 4.2 million square feet of new space by 2028.
D&B Properties reports that in the second quarter of 2024, the office rental market in Dubai increased by 19%, which is noteworthy given the city’s thriving economy and rising demand for commercial space. “This substantial rise in office rents highlights the limited availability of commercial properties in the city, which has intensified competition for prime locations,” the report said.
Faisal Durrani, partner – head of Research, Mena of Knight Frank, said despite concerns that the pandemic would lead to a permanent shift toward remote working, demand has in fact surged, which stands in sharp contrast to many other global cities. “Businesses remain laser-focussed on securing best-in-class space, not least because of the proven links between occupying Grade A offices and the ability to attract and retain the best talent. Offices have graduated to become showrooms,” he said.
The Dubai International Financial Centre (DIFC), where average rentals approach Dh355 per square foot, remains the most costly office rental area in the city, according to the Knight Frank report. In second place, the Trade Centre District has rents of Dh 350 per square foot, which is an impressive 81% increase in the last year. Although it is ranked third, Downtown Dubai is still 1.5 times less expensive than the DIFC, its neighbor.
In the past 12 months, rents at The Greens (77%) and Jumeirah Lakes Towers (67%) have increased by double digits, surpassing Dh200 per square foot (psf). Sheikh Zayed Road (West) (77%) and The Greens (77%) have also seen double-digit growth rates.
According to Adam Wynne, partner and head of Commercial Agency, UAE, during the first half of the year, the consultancy’s team registered 578,353 square feet of new requirements for offices, demonstrating how robust the industry remains as long as supply and demand remain out of balance.
Wynne noted that the ‘flight to quality’ trend has become more prevalent in the market as we witness the emergence of ESG themes in occupier requirements. “Businesses are now willing to pay a premium for good quality office space in the UAE. Sustainability credentials are especially important to international blue-chip occupiers.”
A thriving market is also indicated by high transaction volumes. In H1 2024, the total value of transactions increased by 24% year over year to Dh 2.7 billion from Dh 2.2 billion in H1 2023. Furthermore, from 1,334 deals in H1 2023 to 1,414 deals in H1 2024, there were more sales transactions.
Office sales prices in Downtown Dubai remain dominant, with average values reaching Dh3,609 psf—a 132% increase over 2020.
The 19% increase in office rents in Q2 2024, according to Adham Younis, GCEO of D&B Properties, is a reflection of Dubai’s strong business climate and the rising demand for premium commercial properties. “While the limited availability of office spaces presents challenges, the ongoing initiatives to expand the market and provide innovative solutions will help meet the growing demand and support the city’s economic growth.”
