Businesses are increasingly moving from Dubai’s central districts to newer areas like Expo City due to a shortage of high-quality office spaces, which are in exceptionally high demand. With supply struggling to keep up in prime locations, companies are securing office buildings during the construction phase to ensure they don’t miss out on premium office opportunities.
Adam Wynne, Partner and Head of Commercial Agency at Knight Frank Dubai, noted, “Companies are prioritizing quality office spaces, leading to a shift from central Dubai to newer locations where such spaces are available. As prime office spaces in key business districts near full capacity, businesses are exploring alternative areas for expansion.” He added that locations like Dubai Science Park and Expo City are gaining traction due to their modern facilities and competitive rental rates.
The demand for A-grade office spaces has surged, with some areas reaching 100% occupancy and most averaging over 90%. This is driven by an influx of new businesses into Dubai, including multinational companies relocating their regional and global offices. These moves are motivated by geopolitical tensions, Dubai’s zero income tax policy, and relatively affordable property prices compared to other global cities.
As of Q4 2024, the Dubai International Financial Centre (DIFC) reported nearly 100% occupancy, while 17 Grade-A buildings on the Sheikh Zayed Road recorded an average occupancy of 95.4%. According to Asteco, over 700,000 sqft of new office space was added across Dubai in 2024.
In the second half of 2024, average office lease rates in Dubai’s key submarkets grew by 9.1%, with the Trade Centre District seeing the highest rental growth. Faisal Durrani, Partner and Head of Research for Mena at Knight Frank, attributed this rising demand to new business entrants and the expansion of local businesses. He explained, “Dubai’s office market differs from the global trend. With supply lagging demand and spaces being snapped up during construction, rents are expected to continue rising. Despite recent growth, office rents in prime areas like DIFC remain about 50% below 2009 levels.”
Asteco reported that Dubai’s office sector maintained strong momentum in 2023, with both transactional volumes and values increasing. However, growth slowed towards the end of the year due to a lack of supply, prompting tenants to renew existing contracts rather than secure new spaces at higher rents.
Looking ahead, Knight Frank projects that Dubai’s prime office supply will reach approximately 8.2 million sqft between 2025 and 2028, an 86% increase compared to the 4.4 million soft delivered between 2021 and 2024. Key projects contributing to this supply include DIFC Square, Tecom, and Aldar’s new development on the Sheikh Zayed Road.
