Dubai's Commercial Real Estate Market Undergoes New Expansion Due to Increasing Demand for Premium Spaces: Savills Survey Findings
Dubai's Office Market Surges in Q1 2025, Mirroring Robust Fundamentals and Growing Global Appeal
Dubai's office market has witnessed a surge in Q1 2025, as indicated by a series of indicators in the latest report by Savills Middle East. The emirate's office sector is exhibiting strong positive momentum, fueled by limited supply and favorable market fundamentals.
According to the report, Dubai International Financial Centre (DIFC), Business Bay, Downtown Dubai, and TECOM are among the key business districts performing exceptionally well, with DIFC's occupancy rate reaching an impressive 98%. This heightened demand for well-located, premium office spaces has made these areas sought after by both regional and international occupiers.
Average office rental prices increased by a striking 45% across 22 sub-markets during Q1 2025. This increase in rental prices, coupled with a 4.9% rise in net effective occupier costs, indicates Dubai's emergence as one of the most active and competitive prime office markets globally. Dubai currently ranks 8th globally for total prime office occupancy costs, averaging $148.90 per sq ft per annum.
The historic low vacancy rates and intensified competition among occupiers have led to limited options for investors. However, demand is primarily driven by core sectors such as financial services, consulting, technology & media, while agile smaller corporations are also increasingly active, particularly in regions offering better value and accessibility, such as Dubai South and Expo City.
The driving force behind these trends is the rising confidence in Dubai's business environment. In 2024, Dubai Chamber of Commerce welcomed 70,500 new companies, representing a 4.6% increase year-on-year. This influx of new entrants is on the lookout for flexible, well-connected, and high-specification workplaces, hence the growing preference for serviced office operators who continue to expand into community-centric and mixed-use locations.
Landlords are proactively addressing the issue of limited supply by offering tailored leasing terms, enhanced amenities, and refurbishment strategies to cater to occupier expectations. In some cases, Business Bay strata landlords are even quoting rents comparable to DIFC to reflect the broader uplift in perceived value across sub-markets.
While lease renewals serve as a preferred option for many businesses due to the added stability offered by RERA rental protections, occupiers are evaluating their workspace usage more closely. There is an increasing emphasis on functional layouts, optimization, and long-term adaptability over expansive floorplates or elaborate fit-outs.
Looking ahead, new office developments are being planned, with many already attracting significant pre-commitment levels, signifying continued market confidence and anticipating that competition for high-quality office space will persist through 2025.
Toby Hall, Head of Commercial Agency at Savills Middle East, further highlighted, "The market dynamics in Dubai underscore its evolving role as a competitive global business hub with constrained premium office space availability."
To delve deeper into the specific findings and insights, read the comprehensive Dubai Office Market Q1 2025 and Global Occupier Markets: Prime Office Costs - Q1 2025 reports here.
News Source: Savills Middle East
- The surge in Dubai's office market in Q1 2025, as reported by Savills Middle East, is driven by innovation and research in the technology & media sector, leading to a growing global appeal.
- Dubai's emergence as one of the most active and competitive prime office markets globally is not only due to limited supply but also the increasing demand for well-located, premium office spaces in business districts such as DIFC, Business Bay, Downtown Dubai, and TECOM.
- The community-centric and mixed-use locations, offering flexible, well-connected, and high-specification workplaces, are attracting agile smaller corporations and regional and international occupiers, contributing to the surge in Dubai's office market.
- Dubai's business environment continues to foster growth, with an increasing focus on environmentally sustainable practices and the adoption of technological advancements in the sports industry, further enhancing its global appeal.
