Dubai’s office real estate market is undergoing a significant transformation, marked by soaring demand, limited supply, and rising rental rates. While the sector has become one of the most liquid and attractive for investment in the region, supply-side challenges and post-pandemic legacy issues continue to shape its trajectory. According to Kommersant, despite its high returns, the segment remains underrepresented in investor portfolios due to management complexity and associated risks.
Market Rebound and Post-Pandemic Gaps
Dubai’s office sector entered 2024 with a pronounced supply deficit. The shortfall traces back to project delays and suspensions during the COVID-19 pandemic, when developers paused activity and postponed launches. As the emirate transitioned into a global center for corporate relocation and capital flow, demand for high-quality office space quickly outpaced supply.
By the end of 2024, only about 60,000 square meters of new office space were introduced to the market. Much of this space was pre-leased even before construction completed. The 2025 year is expected to add 154,000 square meters of new supply. However, analysts anticipate that this will still fall short of meeting persistent demand, especially for Class A facilities. The office sector recorded a 92% overall occupancy rate in 2024, with Class A projects leading at 95%, and in some locations, up to 98%.
Completed Properties Dominate Market Activity
A major trend in 2024 was the dominance of completed properties in transaction volumes. Approximately 95% of office sales involved ready-for-occupancy spaces, reflecting a 4% increase compared to the previous year. The off-plan office market, once dominant in the early 2000s, has not regained traction, as investors show reluctance toward projects still under construction.
The contrast with the residential market is stark: home transactions still reflect a 60:40 split between primary and secondary sales. Office buyers, by contrast, prioritize liquidity and immediate usability. Analysts note that many investors prefer to retain their assets in anticipation of further price growth, rather than selling early during development stages.
The total active office stock in Dubai reached 9.27 million square meters in 2024, according to global consultancy JLL. However, actual leasing data is difficult to quantify due to a lack of transparency in official registries. Available data from signed contracts indicates that just over 1.12 million square meters were leased in 2024.
Future Supply Pipeline and Projected Relief
New supply relief is expected between 2026 and 2028, with the launch of several Class A projects in strategic business districts such as DIFC and Sheikh Zayed Road. These additions are expected to partially ease the current supply shortage.
Simultaneously, international companies continue to drive demand for premium office space, keeping upward pressure on rental prices. Dubai and Abu Dhabi have risen in global rankings for business-friendly cities, occupying third and fourth places respectively in Boston Consulting Group’s latest index, surpassed only by London and Amsterdam. For the third consecutive year, the UAE has been ranked the top country for business creation by the GEM report.
The steady increase in supply has been aided by rapid infrastructure growth and a recovery in construction activity. Analysts note that the rise in business relocations and overall market stabilization post-pandemic have been key drivers of this resurgence.
Regional Investment Appeal and Market Fundamentals
Commercial real estate in Dubai, particularly office properties, has become an increasingly sought-after asset class due to a number of factors: tax-free income and capital gains, political and economic stability, and a favorable investment climate. Investors are drawn by these structural advantages, as well as the ease of doing business and the emirate’s regulatory environment.
The annual growth in office property values in Dubai ranges from 7 to 10%, depending on location, quality, and market conditions. In prime locations, capital appreciation rates can reach up to 12% annually.
Rental Surge in Core Business Districts
Rental rates in Dubai’s most prominent business areas have surged. Between 2019 and 2024, Business Bay saw a 260% rise in average rent. Trade Center rents increased by 228.4%, DIFC by 111%, and Downtown by 98%. By 2025, the median rental price across four major business hubs is expected to reach $34 per square meter per month, with the city-wide average rising to $47.
For comparison, rental rates in prime office districts in Germany range between €45–50 per square meter monthly. Madrid’s average rate is around €44, while London City commands up to €82.5.
Secondary Market Liquidity Remains High
The secondary market for office space in Dubai remains exceptionally dynamic. Resale activity is high, with individual units often changing hands three to four times. This reflects the high liquidity of the office segment, where investor strategies vary from long-term capital appreciation to short-term flipping. Some owners offer discounts for rapid sales, while others hold properties in anticipation of further market gains.
Office real estate has become a strategic investment class amid constrained supply, international business demand, and ongoing urban development. Although the current undersupply poses a challenge, upcoming high-end projects are expected to bring some balance to a market defined by resilience and sustained investor interest.
