• Prime office occupancy levels are above 95% in key business districts like the DIFC and Business Bay
  • Business services, real estate, and the banking & finance sectors drove the new prime office demand in 2024

Dubai: In H2 2024, average office lease rates across Dubai’s key submarkets showed strong growth, rising by an average of 9.1% in H2 2024, with the highest rental growth being registered in Trade Center District (96%), according to the H2 2024 Dubai Office Market Review by global property consultant Knight Frank.

Faisal Durrani, Partner – Head of Research, MENA, commented: “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.

“The narrative in Dubai is very different than the global office story. 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 pre-global financial crisis. Indeed, prime rates in the DIFC are still about 50% below 2009 levels.”

GROWING DEMAND AND UPCOMING SUPPLY

During 2024, Knight Frank recorded 1.28 million sqft of new office space demand, a 64% increase on 2023.

The top sectors contributing to the demand are business services, real estate, and the banking & finance sectors, which collectively contributed to 843,111 sqft of new demand in 2024, each representing 23%, 23%, and 20% of total requirements, respectively.

Knight Frank projects that Dubai’s prime office supply will reach approximately 8.2 million between 2025 and 2028. This is up 86% when compared to the 4.4 million sqft delivered between 2021 and 2024.

The DIFC currently reports nearly 100% occupancy as of Q4 2024, while 17 Grade-A assets on Sheikh Zayed Road tracked by Knight Frank boast an average occupancy of 95.4%. The bulk of new supply will come from key projects including DIFC Square (5.4 million sqft), TECOM (650,000 sqft) and Aldar’s new development on Sheikh Zayed Road (88,000 sqft).

OUTLOOK

Generally, occupancy rates in the DIFC, Downtown Dubai, and Business Bay are currently between 95% and 99%, driven by robust tenant demand and limited new space. As a result, rents have surged significantly - rising by an average of 46% in Business Bay alone.

With prime office space in Dubai’s key business districts nearing full capacity, companies are exploring alternative locations for expansion. Areas such as Dubai Science Park and Expo City are attracting heightened interest, thanks to their state-of-the-art facilities and attractive 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. 

“Locations like Dubai Science Park and Expo City are experiencing increased interest, with occupiers drawn by state-of-the-art facilities and attractive rents.”