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Dubai property: Firms moving to these locations due to shortage of quality office space
Knight Frank projected that Dubai’s prime office supply will reach approximately 8.2 million between 2025 and 2028
- PUBLISHED: Mon 10 Mar 2025, 10:58 AM
Businesses are relocating from Dubai’s central districts to newer locations such as Expo City due to a shortage of high-quality office space, which is witnessing exceptional demand.
With supply lagging demand in prime locations, companies are snapping up office buildings in Dubai during the construction phase to ensure that they don’t miss out on opportunities for prime office space.
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“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,” said Adam Wynne, partner and head of commercial agency, Dubai, at Knight Frank.
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“Locations like Dubai Science Park and Expo City are experiencing increased interest, with occupiers drawn by state-of-the-art facilities and attractive rents,” he added.
Demand for office space – especially A-Grade – has been on the rise with some of the areas reaching 100 per cent occupancy level and the majority of them average over 90 per cent occupancy level due to the inflow of new businesses into the emirate.
Many multinational companies have relocated their regional and global offices to Dubai amidst geopolitical tensions and to capitalize on zero income tax as well as affordable property prices compared to other global cities.
Dubai International Financial Centre (DIFC) currently reports nearly 100 per cent occupancy as of the fourth-quarter of 2024, while 17 Grade-A assets on Sheikh Zayed Road tracked by Knight Frank record an average occupancy of 95.4 per cent.
According to Asteco, over 700,000 sqft of new office space were added across Dubai in 2024.
Snapped up during construction
In the second half of 2024, average office lease rates across Dubai’s key submarkets showed strong growth, rising by an average of 9.1 per cent, with the highest rental growth being registered in the Trade Centre District.
Faisal Durrani, partner and head of research for Mena at Knight Frank, attributes rising demand for office space to new business entrants as well as expanding local businesses.
“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 the pre-global financial crisis. Indeed, prime rates in the DIFC are still about 50 per cent below 2009 levels,” he said.
Asteco said the office sector in Dubai maintained its positive momentum last year, with both transactional volumes and values increasing.
“Whilst the pace of growth appeared to be easing towards the end of the year, this moderation reflected a lack of supply, not demand; thus necessitating tenants to renew their existing contracts rather than take up new space at higher rents,” it added.
Knight Frank on Monday projected that Dubai’s prime office supply will reach approximately 8.2 million between 2025 and 2028, up 86 per cent compared to the 4.4 million sqft delivered between 2021 and 2024.
The bulk of new supply will come from key projects including DIFC Square, Tecom and Aldar’s new development on Sheikh Zayed Road.
