The UAE office market remained firmly in landlords’ favor during the second quarter of 2026. Tenants continued competing for limited office space across Dubai and Abu Dhabi. As a result, landlords maintained strong pricing power despite continued uncertainty among businesses and cautious expansion decisions.
Companies remained careful when making immediate expansion plans. However, many firms continued exploring new offices and reviewing long-term property strategies. Meanwhile, limited vacancies kept competition high across both major business hubs, particularly for high-quality offices in prime commercial locations.
Dubai recorded particularly strong activity during the quarter. Rental contract registrations increased 24.6 percent from a year earlier. They also climbed 15.1 percent compared with the previous quarter, showing sustained leasing momentum and continued demand from businesses across the emirate.
New contracts drove much of Dubai’s growth. The increase suggested stronger business confidence across the emirate. Furthermore, companies continued searching for suitable offices despite limited availability across prime commercial locations and growing competition between potential tenants.
Abu Dhabi also recorded growth, although its market moved at a slower pace. Contract registrations increased 5.4 percent annually. However, quarterly activity remained broadly unchanged, indicating that businesses continued taking a cautious approach to new office commitments.
Contract renewals played an important role in Abu Dhabi. Renewals increased 7.1 percent compared with the same period last year. This trend showed continued confidence among existing office tenants and their willingness to maintain operations in the capital.
At the same time, new businesses continued examining opportunities in Abu Dhabi. However, some companies delayed final leasing decisions. They continued monitoring rental prices, available properties, and broader economic conditions before making firm commitments to new office space.
Both cities maintained exceptionally low vacancy rates during the quarter. Dubai’s overall office vacancy rate reached 6.1 percent, down from 7.7 percent a year earlier. The decline highlighted strong tenant demand and limited available office space.
Limited premium supply pushed more companies toward lower-grade buildings. Consequently, demand increased for Grade B and Grade C offices across Dubai’s commercial districts. Businesses increasingly considered alternative properties as prime offices became more difficult to secure.
Dubai’s Grade B vacancy rate fell to 8 percent from 10.9 percent during the same period last year. Grade C vacancy also declined to 10.9 percent from 12.7 percent, showing stronger demand across secondary office segments.
Prime office availability remained extremely limited. It stood at just 0.7 percent during the quarter. Grade A vacancy reached 4.2 percent after a small increase from the previous period, although availability remained tight across the premium market.
Abu Dhabi faced even tighter conditions. Its overall vacancy rate stood at only 1.4 percent. Prime office availability remained exceptionally scarce at 0.1 percent during the quarter, leaving tenants with very limited choices in the highest-quality buildings.
Grade A vacancy reached 1.4 percent in Abu Dhabi. Meanwhile, Grade B vacancy stood at 2.7 percent. These figures highlighted the limited amount of available office space and continued pressure on companies seeking suitable commercial properties.
Rents also continued climbing in Dubai. Grade B offices recorded the strongest annual increase. Rents jumped 31.5 percent compared with the previous year, reflecting intense tenant competition and the limited supply of affordable, high-quality office space.
Grade B rents also increased 8.7 percent during the quarter. Grade A offices followed with annual growth of 26.2 percent. Quarterly Grade A rents increased 8.8 percent, showing continued upward pressure across Dubai’s main office segments.
Prime office rents also recorded significant annual growth. They increased 13.6 percent during the year. Strong demand and limited availability continued supporting rental growth across premium locations, particularly in the emirate’s most established commercial districts.
Abu Dhabi delivered a more mixed rental performance. Prime office rents increased 11.7 percent annually. However, they declined slightly by 0.3 percent during the quarter, suggesting that recent regulatory measures could begin influencing short-term rental movements.
Grade A and Grade B rents remained largely stable quarterly. Still, both segments recorded annual growth. Grade A rents rose 5.1 percent, while Grade B rents increased 4.2 percent, demonstrating continued underlying demand across the market.
Meanwhile, new regulations could influence rental movements in Abu Dhabi. A Rent Freeze policy came into effect toward the end of the quarter. The measure could limit further short-term rental increases and provide greater predictability for some tenants.
The policy excludes certain properties and locations from its restrictions. These include Abu Dhabi Global Market and newly completed projects. Such exemptions could preserve flexibility within specific parts of the market while the wider policy affects rental conditions.
Supply also remains an important issue for the UAE office market. Abu Dhabi added around 38,000 square metres of Grade A space during the quarter. Total office inventory reached roughly 4.2 million square metres, providing some additional capacity.
Dubai recorded no major office completions during the quarter. Its total office stock remained around 101.4 million square feet. Limited new supply continues supporting landlords and existing property owners, especially in locations with strong tenant demand.
Looking ahead, Abu Dhabi has approximately 57,000 square metres of office space in its pipeline. Dubai could add nearly 940,000 square feet during the second half of 2026, potentially providing some relief to the current supply shortage.
However, some existing Dubai buildings have temporarily closed for refurbishment. Owners are upgrading properties to meet demand for better-quality offices. These improvements could gradually address shortages in premium buildings and provide tenants with additional options.
Developers also face challenges involving material imports and supply chains. Nevertheless, strong demand continues encouraging developers to prioritize project delivery and complete planned developments, particularly where pre-leasing activity indicates strong demand from prospective tenants.
Pre-lease agreements have already secured space across several upcoming developments. Therefore, landlords continue benefiting from strong tenant interest and limited high-quality supply. This environment allows property owners to maintain stronger negotiating positions when discussing new leases.
Flexible workspaces are also gaining momentum across both markets. Companies increasingly seek shorter commitments and lower upfront costs. This trend offers businesses greater flexibility during uncertain economic conditions while allowing them to adjust office requirements as their workforce changes.
Furthermore, artificial intelligence and automation are changing how companies organize their workforces. As a result, businesses increasingly value adaptable office arrangements and efficient workplace designs that can accommodate changing operational and staffing requirements.
Overall, the UAE office market enters the second half of 2026 with strong fundamentals. Low vacancies continue supporting landlords across Dubai and Abu Dhabi despite economic uncertainty and cautious corporate expansion plans.
At the same time, tenants face greater competition for quality offices. Rental growth could continue through the end of the year despite regulatory changes, additional supply, and gradual adjustments across different market segments.
Abu Dhabi’s Rent Freeze policy may moderate quarterly increases. However, strong demand and limited supply should continue supporting the broader market across key commercial districts, particularly where premium office availability remains extremely limited.
Consequently, landlords are likely to retain significant negotiating power. Meanwhile, companies may need to move faster when suitable office space becomes available, particularly in competitive locations where vacancies remain low and rental costs continue rising.
