Dubai Office Rents Surge 19% in Q2 2024: Most Expensive Areas Unveiled
Dubai’s office market is experiencing a significant supply crunch that is expected to persist until 2027-2028, driving up rents as new businesses and foreign firms flock to the city.
Recent developments, however, aim to address the growing demand, particularly for Grade-A office spaces.
The Dubai office market continues to thrive despite the ongoing supply shortage. Robert Thomas, Head of Agency at Cushman & Wakefield Core, noted that while developers are beginning to respond to the demand with new office projects, it will still be two to four years before these developments come online.
“The likelihood of pre-letting is high, indicating that the supply shortage will persist until a substantial portion of announced inventory is completed,”
Thomas said.
The UAE, and Dubai in particular, is becoming an increasingly attractive market for international businesses due to its strategic location, zero personal tax, and robust infrastructure. According to real estate consultancy Asteco, the market for Grade-A office spaces remains strong due to high demand and limited supply. Asteco’s data shows that 0.37 million square feet of office space were added in the second quarter of 2024, with another 0.37 million square feet expected in the latter half of the year.
Noteworthy developments include the Immersive Tower in Dubai International Financial Centre (DIFC), new offices in D3 Phase 2, and Aldar’s mixed-use development on Sheikh Zayed Road. Additionally, several other projects are in the pipeline in DIFC and other key areas.
Despite these new projects, Dubai’s office occupancy rates are at a record high, with city-wide occupancy at 90% and Grade-A offices at 93%. Central business districts such as Downtown Dubai, DIFC, and Sheikh Zayed Road are experiencing even higher occupancy levels, intensifying rent pressures.
The rental market is seeing a dramatic increase, with city-wide rents rising by 19% year-on-year, according to Cushman & Wakefield Core. Business Bay has seen the sharpest rise, with rents increasing by over 64% due to high demand. The area, along with Jumeirah Lake Towers and Sheikh Zayed Road, has seen some of the highest rental growth since the pandemic.
The most expensive areas for office rentals in Dubai are Bur Dubai, Jumeirah Lake Towers, Barsha Heights (Tecom), Business Bay, Sheikh Zayed Road, and DIFC. According to Asteco, citywide office rents have surged by 19% year-on-year, with Business Bay witnessing the sharpest increase of over 64% due to high demand and intense competition for available spaces.
Charlie Sargent, Associate Director at MRICS, highlighted the challenges faced by global corporates due to extended decision-making timelines, which are often mismatched with the rapid pace of the current market.
“High-quality vacant office units are quickly absorbed, leaving corporates who take longer to decide at a disadvantage,”
Sargent said.
As Dubai’s office market continues to evolve, the combination of high demand and limited supply is set to keep rents elevated and availability tight for the foreseeable future.
News Source: Khaleej Times