Amidst Supply Shortages and Rising Demand | Dubai Office Rents Grow by 9.1%

The average office rental prices in key submarkets across Dubai witnessed a notable growth of 9.1% in the second half of 2024, according to a report by global real estate consultancy firm Knight Frank.
The Trade Center area experienced the highest rental increase, reaching 96%.

Rising Demand and Business Expansion

The Head of Research for the Middle East and North Africa at Knight Frank stated that Dubai’s office market is seeing increasing demand due to new business entries and company expansions, leading to a severe shortage of premium office spaces.

He further noted that Dubai’s market follows a different trend compared to global markets, as new office spaces are leased or sold during the construction phase, pushing rental prices higher. Despite this growth, rental rates remain below pre-global financial crisis levels, with DIFC office rents still 50% lower than in 2009.

New Demand for Office Spaces

In 2024, Knight Frank recorded 1.28 million square feet of new office space demand, marking a 64% increase compared to 2023.
The business services, real estate, banking, and finance sectors led this demand, collectively occupying 843,111 square feet. Business services accounted for 23%, real estate for 23%, and banking & finance for 20% of the total demand.

Increase in Luxury Office Supply

Knight Frank expects Dubai’s luxury office supply to reach 8.2 million square feet between 2025 and 2028, an 86% increase compared to the 4.4 million square feet delivered between 2021 and 2024.

As of Q4 2024, the DIFC occupancy rate reached nearly 100%, while 17 Grade A properties along Sheikh Zayed Road maintained an average occupancy rate of 95.4%.

New Expansion Locations

The Head of Commercial Agency in Dubai highlighted that tenants are prioritizing quality, prompting companies to move to new locations offering modern office spaces with competitive rents, such as Dubai Science Park and Expo City. He added that with premium office spaces in core business districts nearing full capacity, companies are seeking alternative expansion sites.

Future Outlook

Knight Frank forecasts continued rental growth, driven by strong demand and limited supply. Occupancy rates are expected to remain between 95% and 99% in key areas such as DIFC, Downtown Dubai, and Business Bay, where rents have surged by 46% recently.

Edited by: Imtilak Global©