Dubai’s office market now faces a big shortage of available spaces, which will continue until 2027-2028. As new companies and foreign businesses keep moving to the city, the lack of office spaces pushes rents up.
Builders are working on new projects to meet this need, but the gap between what’s available and what’s needed won’t close for several years. Most of these new buildings for top-notch Grade-A office spaces, will take two to four years to finish.
Not Enough Supply and Higher Rents
The Dubai office market continues to be robust even with the ongoing lack of available spaces. Robert Thomas, who leads the Agency at Cushman & Wakefield Core, pointed out that builders are beginning to react by starting new projects, but it will take a while for these buildings to be ready.
“There’s a good chance these offices will be rented out ,” Thomas said, hinting that many of these new workspaces will be leased before they’re even finished, which will keep the supply tight until a big chunk of the new stock is done.
Dubai and the UAE have an appeal for international businesses. Their prime location, zero personal income tax, and reliable infrastructure make them attractive to companies wanting to grow or move. This has caused a rise in demand for top-quality office spaces even though supply is still tight.
Real estate firm Asteco reports that Dubai added 0.37 million square feet of office space in the second quarter of 2024. They expect another 0.37 million square feet to be added by year’s end. Yet, this extra space still falls short of meeting the growing need.
New Developments in the Pipeline
A bunch of new office projects are in the works to tackle the shortage. Some stand-out examples 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. On top of that other projects are happening in key spots like DIFC and Downtown Dubai.
Even with these new buildings, office spaces in Dubai are packed to the brim. Across the city, 90% of office space is taken, while 93% of Grade-A offices are occupied. It’s even tighter in central business areas like Downtown Dubai, DIFC, and Sheikh Zayed Road. Because of this squeeze, rents keep going up.
Dramatic Rent Increases
Dubai’s rental market is growing fast because many companies want offices, but there aren’t enough spaces. Rents in the city have gone up by 19% compared to last year, according to Cushman & Wakefield Core.
Business Bay has seen the biggest jump, with rents shooting up by over 64%. This big increase happens because lots of companies are competing to get the few spaces available, as more businesses want to set up shop or grow in the city.
Other parts that have grown in rent include Jumeirah Lake Towers and Sheikh Zayed Road. These spots, along with Business Bay, have attracted the most interest since COVID-19, with demand still going up.
The priciest spots to rent offices in Dubai are Bur Dubai, Jumeirah Lake Towers, Barsha Heights (Tecom), Business Bay, Sheikh Zayed Road, and DIFC. These areas have turned into top picks for companies because they’re close to main business and money hubs.
Challenges for Global Corporates
The strong demand and quick turnover in Dubai’s office market create problems for global firms those that need more time to decide. Charlie Sargent, Associate Director at MRICS, noted that companies with long decision-making processes often struggle in today’s market.
“Top-quality empty office spaces don’t stay available for long,” Sargent said, which means companies that take too much time to get office space might lose out on the best choices. As the market remains tight, businesses need to move quickly to get office space before others take it.
Future Outlook
The Dubai office market looks set to stay competitive for years to come. As more firms move in and current ones grow, the need for office spaces will keep going up. Yet, with not enough supply expected until at least 2027-2028, rents are likely to stay high, and space will be hard to find.
New buildings are going up, but it’ll take time for these projects to finish and change things. For now, companies wanting office space in Dubai will need to be quick and on the ball to snag what’s available.
As Dubai keeps drawing in foreign companies, the city’s office scene will change to suit the needs of its expanding business world. For now, the mix of high demand and limited supply looks set to keep rents high and office space hard to find. This makes it a tough yet thrilling time for businesses working in Dubai’s lively market.
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