Dubai Property: Firms Relocating Amid Shortage of Quality Office Space

Dubai’s commercial real estate market is witnessing a significant shift as businesses relocate from central districts to emerging hubs such as Expo City. The primary reason for this trend is the shortage of high-quality office space in prime locations, where demand continues to outstrip supply.

With limited availability in established business districts, companies are increasingly securing office buildings during the construction phase to ensure access to premium spaces.

Rising Demand for Premium Office Spaces

Adam Wynne, Partner and Head of Commercial Agency at Knight Frank Dubai, highlights the ongoing transition: “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.”

Newer areas such as Dubai Science Park and Expo City are experiencing a surge in interest, primarily due to their state-of-the-art infrastructure and competitive rental prices. This trend reflects the broader shift in Dubai’s commercial property market, where businesses prioritize high-quality office environments that align with modern corporate needs.

Multinational Firms Moving to Dubai

The increasing demand for office space is largely fueled by the arrival of multinational corporations relocating their regional and global headquarters to Dubai. Factors such as geopolitical stability, zero income tax policies, and relatively affordable property prices compared to other global cities make Dubai an attractive destination for international businesses.

As a result, A-Grade office spaces in major business districts have reached near-full occupancy levels. The Dubai International Financial Centre (DIFC) reported almost 100% occupancy by the fourth quarter of 2024. Meanwhile, 17 Grade-A office properties along Sheikh Zayed Road tracked by Knight Frank recorded an average occupancy of 95.4%.

According to Asteco, a leading real estate consultancy, over 700,000 square feet of new office space were introduced in Dubai in 2024. Despite this expansion, demand continues to outpace supply.

Office Spaces Snapped Up Before Completion

The growing demand for premium office spaces has led to a sharp increase in rental rates. In the latter half of 2024, lease rates across Dubai’s key office submarkets saw an average increase of 9.1%, with the highest growth recorded in the Trade Centre District.

Faisal Durrani, Partner and Head of Research for MENA at Knight Frank, explains this dynamic: “The narrative in Dubai is very different from the global office market. With supply continuing to lag demand and spaces being secured during the construction phase, we expect rental rates to maintain an upward trend. Even with recent growth, office rents still remain below their pre-global financial crisis levels. In fact, prime rents in DIFC are still about 50% lower than in 2009.”

Asteco also reported a continued rise in transactional volumes and values within the office sector. While the pace of growth appeared to slow towards the end of 2024, this was attributed to a lack of available supply rather than a decline in demand. As a result, many tenants opted to renew existing leases instead of acquiring new spaces at higher rental rates.

Future Office Supply in Dubai

Knight Frank forecasts a significant increase in Dubai’s prime office supply between 2025 and 2028. The firm projects that approximately 8.2 million square feet of new office space will be delivered during this period—an 86% rise compared to the 4.4 million square feet completed between 2021 and 2024.

Key projects contributing to this supply boost include DIFC Square, Tecom developments, and Aldar’s new commercial project on Sheikh Zayed Road. These initiatives are expected to provide much-needed relief to the office market, offering businesses more opportunities to secure high-quality spaces in strategic locations.

Conclusion

The shortage of premium office spaces in Dubai’s central districts has prompted businesses to explore emerging commercial hubs. With demand continuing to rise, new developments are being swiftly absorbed, often before completion. While rental rates are climbing, Dubai remains a globally competitive destination for businesses, thanks to its favorable economic environment and world-class infrastructure.

As new office supply enters the market in the coming years, companies will have more options to expand their operations in Dubai’s evolving commercial landscape. For investors and businesses looking to establish a presence in the UAE, the coming years present a prime opportunity to secure premium office spaces in one of the world’s fastest-growing business hubs.