Dubai’s office market continues to demonstrate strong fundamentals, with rising demand, increased occupier activity, and a dynamic shift in market behavior, according to the latest Dubai Office Market report from Savills.
In the first quarter of 2025, the Dubai office market showcased remarkable resilience and growth, as detailed in Savills’ report. The study revealed that Dubai experienced an average year-on-year office rental price growth of a staggering 45% across various sub-segments. This surge signifies not only a recovery but also a robust demand for office space, particularly in key business districts such as the Dubai International Financial Centre (DIFC), Business Bay, Downtown Dubai, and TECOM. Notably, occupancy rates in DIFC are nearly at full capacity, reaching an impressive 98%.
The increasing demand highlights how well-located, Grade A office spaces are becoming increasingly sought after by both regional and international occupiers. As global businesses recognize Dubai as a strategic location, the appetite for premium spaces is expected to grow, leading to competitive bidding and sustained rental increases.
One key indicator of market vitality is the reported 4.9% rise in net effective occupier costs in Q1 2025. This metric, which encompasses base rent, fit-out expenses, and related costs, provides a comprehensive view of the overall leasing expenditure. Such a rise positions Dubai among the most competitive prime office markets globally, ranking 8th for total prime office occupancy costs, with an average of $148.90 per square foot per annum. This increase reflects Dubai’s growing stature as a gateway hub for the Middle East, Africa, and Asia.
According to Toby Hall, Head of Commercial at Savills, “This growth reflects confidence in Dubai’s long-term positioning.” He suggests that companies are beginning to view Dubai not just as a regional base but as a global node for innovation, finance, and enterprise. The rising rents and costs are indicative of high demand and the limited availability of premium space, which further drives competition in the market.
Several core sectors are fueling this demand, particularly financial services, consulting, and technology & media. These sectors accounted for the largest share of office transactions, showing a clear trend toward services that thrive in dynamic urban environments. As businesses expand their operations, the need for high-quality office space remains critical.
While there is a tight supply of Grade A office space in established districts, landlords are adapting to the changing market landscape. Many are now offering tailored leasing terms, improved amenities, and refurbishment strategies to meet the evolving expectations of tenants. Some landlords in Business Bay, for example, have adjusted their rental prices to be comparable to those in DIFC, illustrating a broader perception of increased value across various sub-markets.
Lease renewals are becoming more popular among businesses, especially those located outside the DIFC, where the Real Estate Regulatory Agency (RERA) provides rental protections that enhance stability amid rising costs. Occupiers are not only renewing leases but are also reassessing their space utilization, emphasizing functionality and adaptability over grandiose designs or expansive layouts. This shift is indicative of a broader trend toward efficiency in workspace design, catering to modern work styles and hybrid arrangements.
The Outlook
Looking ahead, the Savills report highlights that new office developments are on the horizon; however, many of them are already seeing significant pre-commitment levels. This trend reflects ongoing market confidence and suggests that the competition for high-quality space will be an enduring theme throughout 2025. The emphasis on quality over quantity indicates that as Dubai’s office market matures, demand will likely remain strong.
As Hall puts it, “Dubai’s office market is evolving, not tightening.” This evolution signals a growing maturity, where rising rental prices reflect sustained interest and robust business fundamentals. With the landscape dynamically shifting, Dubai is positioning itself as a long-term destination for global enterprises, ensuring that its office market remains a focal point for business activity in the years to come.
