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Dubai’s office market sees unprecedented uptake and rental surge in Q3 2024

Average Grade A rental values surged by 25% year-on-year in the third quarter

Dubai’s commercial office market is reaching new heights, with average Grade A rental values surging by 25 per cent year-on-year in the third quarter, a report showed on Wednesday.

According to Savills’ Q3 2024 Dubai Office Market report, specific locations like Business Bay and Downtown experienced jumps of 44 per cent and 36 per cent respectively during the period.

More than 24,000 new businesses were registered in the first half of 2024, marking a 5 per cent year-on-year growth. This surge underscores the strong economic momentum fuelled by the Dubai Economic Agenda (D33) and highlights the emirate’s reputation as a hub for international trade and innovation. Key business areas such as DIFC, Downtown, and Business Bay now boast occupancy rates between 95 per cent and 97 per cent reflecting robust demand for high quality office spaces.

DIFC’s premier properties lead the market, reporting rent increases as high as 25 per cent while new developments such as DIFC Square and Immersive Tower are set to add over 10 million square feet of premium office space by 2028.

Demand for prime commercial space is being driven by a substantial rise in new business registrations and expansion activities by existing firms, including those in finance and technology sectors, the city’s real estate landscape is more competitive than ever, positioning Dubai as a top global business destination.

“Dubai’s office market growth underscores its appeal as a global business hub, bolstered by ease of setup, favourable tax conditions, and a strategic location,” said Toby Hall, head of commercial agency at Savills Middle East. “Businesses are establishing or expanding their presence here, recognising the value of high-quality office spaces that support talent attraction and growth. This demand signals further market evolution in the years ahead.”

Paula Walshe, director of transactional services at Savills Middle East, added: “The unprecedented rental increases and high occupancy rates demonstrate Dubai’s standing as a premier destination for global business expansion. We’re seeing strong interest from international firms, especially in finance and technology, prioritising flexible office spaces to meet their ambitious growth targets and align with Dubai’s strategic vision.”

In addition, the rise of hybrid working models has led to a growing demand for flexible workspaces, with companies opting for open-plan layouts and co-working solutions like those offered by Executive Centre and Cloud Spaces. These spaces are particularly attractive for startups and new entrants seeking flexible lease terms and a rapid operational setup.

Demand for office space is concentrated in areas with prime offerings, yet more affordable options are also experiencing significant rental increases, as seen in Dubai Science Park and Dubai Investments Park, which recorded a 37 per cent year-on-year rise. Expo City is emerging as a competitive option, offering high-quality facilities with strong transport links at a lower price point than the central business districts.

The report projects that this demand will continue through the year as more businesses set up in Dubai to take advantage of its strategic location, supportive business environment, and high-quality infrastructure.