Dubai’s office market demonstrated robust performance in the second half of 2024, with average lease rates across key submarkets rising by 9.1 per cent, according to Knight Frank’s H2 2024 Dubai Office Market Review.
The Trade Center District recorded the highest rental growth at 96 per cent.
“Dubai’s office market continues to experience rising levels of demand in the form of new business entrance as well as expanding businesses. This rising demand means that prime office space is in exceptionally short supply city-wide,” Faisal Durrani, Partner – Head of Research, MENA said.
Dubai office demand up 64 per cent in 2024 as business hub expands
Durrani noted the contrast between the emirate and global office markets, adding, “With supply continuing to lag demand and be snapped up during the construction of new office buildings, we expect rents to sustain their upward trajectory. Despite recent growth, office rents still trail the pre-global financial crisis. Indeed, prime rates in the DIFC are still about 50 per cent below 2009 levels.”
Knight Frank recorded 1.28 million square feet of new office space demand during 2024, representing a 64 per cent increase compared to 2023. Business services and real estate sectors each accounted for 23 per cent of total requirements, while banking and finance contributed 20 per cent, collectively amounting to 843,111 square feet of new demand.
The property consultant projects the city’s prime office supply will reach approximately 8.2 million square feet between 2025 and 2028, an 86 per cent increase compared to the 4.4 million square feet delivered between 2021 and 2024.
As of Q4 2024, the DIFC reported nearly 100 per cent occupancy, while 17 Grade-A assets on Sheikh Zayed Road tracked by Knight Frank showed an average occupancy of 95.4 per cent.
Major upcoming supply includes DIFC Square (5.4 million square feet), TECOM (650,000 square feet), and Aldar’s new development on Sheikh Zayed Road (88,000 square feet).
DIFC office space reaches 100 per cent occupancy despite rental growth
Occupancy rates in the DIFC, Downtown Dubai, and Business Bay currently range between 95 per cent and 99 per cent, driven by tenant demand and limited new space.
This has resulted in significant rent increases, with Business Bay experiencing an average rise of 46 per cent.
With central Dubai’s prime office space nearing capacity, businesses are exploring alternative locations.
Areas such as Dubai Science Park and Expo City are gaining interest due to their facilities and competitive rents.
Adam Wynne, Partner – Head of Commercial Agency, Dubai, explained: “Occupiers remain driven by quality and we are seeing businesses migrate outside of central Dubai to newer locations where office space is available. With prime space in Dubai’s key business districts nearing full capacity, companies are finding new areas to expand into.”
Wynne added, “Locations like Dubai Science Park and Expo City are experiencing increased interest, with occupiers drawn by state-of-the-art facilities and attractive rents.”
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