Dubai's Office Market Faces Premium Space Shortage
Dubai's real estate market is becoming increasingly dynamic, and as the city's economic growth progresses, there is a growing demand for premium quality office spaces. According to the latest forecasts by Knight Frank, Dubai's premium office supply is expected to grow to approximately 8.2 million square meters between 2025 and 2028, which represents an 86% increase compared to the 4.4 million square meters delivered between 2021 and 2024. However, the demand exceeds the supply, forcing companies to relocate to new areas to secure adequate office space.
The shortage of premium office space and corporate migration
In Dubai's central districts, such as the Dubai International Financial Centre (DIFC) and along Sheikh Zayed Road, premium office spaces show nearly 100% occupancy. This situation encourages companies to move to new, less crowded areas where modern, high-quality offices are still available. According to Knight Frank, companies are increasingly seeking new areas like Expo City or Dubai Science Park, where modern facilities and competitive rental rates attract tenants.
Expo City, which came into the spotlight after the world expo, is becoming increasingly popular among companies. Similarly, Dubai Science Park offers an increasingly attractive alternative for technology and innovation companies. These areas not only have modern infrastructure but also offer more favorable rental rates compared to the central districts.
The rising demand and increasing rental rates
A key feature of Dubai's office market is the imbalance between supply and demand. According to Knight Frank's data, rental rates increased by an average of 9.1% in the second half of 2024, with the highest growth in the Trade Centre District. The demand for premium office spaces is driven not only by the influx of new companies but also by the expansion of local enterprises.
Knight Frank's partner and head of research for the MENA region stated that Dubai's office market story is completely different from global trends. "Demand continues to exceed supply, and companies often reserve new office spaces during the construction phase. This indicates that rental rates will continue to rise. However, current rates are still lower than pre-2009 global financial crisis levels," explained Durrani.
Future Outlook
The future growth of Dubai's office market is supported by several major investments. The new developments at DIFC Square, Tecom, and Aldar along Sheikh Zayed Road will bring significant new office spaces to the market. These projects not only expand supply but also meet the demand for modern, sustainable offices.
According to Asteco's report, more than 700,000 square meters of new office space were introduced to the market in Dubai in 2024. Despite the increase in supply, demand remains high, meaning rental rates may continue to rise. Companies are increasingly forced to extend their existing leases as rental rates in new areas may be significantly higher.
Summary
Dubai's office market is rapidly changing due to explosive demand for premium quality spaces. Companies are increasingly moving to new, less crowded areas to secure appropriate office space. Expo City and Dubai Science Park are new areas that are growing in popularity due to their modern facilities and competitive rental rates. In the future, DIFC Square and other major investments will bring additional office spaces to the market, but demand will remain high, potentially leading to further rental rate increases. img_alt: A group of businessmen in traditional Emirati attire having a meeting in an office in Dubai.
