Dubai’s prime office rental market has experienced a significant surge, with average lease rates climbing by 22.4% year-on-year, according to Knight Frank’s Dubai Office Market Review for H1 2024. The spike is driven by robust demand and a shortage of prime office spaces, particularly in Grade A buildings, where occupancy levels exceed 90%.
Faisal Durrani, Head of Research, MENA, noted that despite expectations of a shift to remote work post-pandemic, demand for premium office spaces remains high, as businesses focus on top-tier locations to attract talent.
Demand Outpaces Supply
Dubai’s office market has faced a supply crunch, with only 1.2 million square feet of space added between 2021 and 2023. This shortage is expected to continue, as just 4.2 million square feet of new office space is projected through 2028, much of which is already pre-leased.
Adam Wynne, Head of Commercial Agency, UAE, emphasized that sustainability has become a key factor in office leasing decisions, with businesses willing to pay a premium for eco-friendly, Grade A office spaces.
Top Office Markets: DIFC and Trade Centre District
The Dubai International Financial Centre (DIFC) remains the most expensive area for office rentals, with average rates at AED355 ($96.7) per square foot. The Trade Centre District follows closely with an 81% annual increase in rents, reaching AED350 per square foot. Other areas like Sheikh Zayed Road and Jumeirah Lakes Towers have also experienced substantial rental growth.
Strong Office Sales Market
Dubai’s office sales market has seen an upswing, with total transaction values rising 24% year-on-year to AED2.7 billion in H1 2024. Downtown Dubai leads the way with an average price of AED3,609 per square foot, reflecting a 132% increase since 2020, while Barsha Heights and Business Bay also posted strong growth.
Dubai Real Estate Market: Who Bought What In First Half Of 2024?
