Dubai's Commercial Real Estate Market Indicates Rate Stability and Enhanced Space Requirements over the Previous Year, According to Savills
In the bustling cityscape of Dubai, the office market has shown a noticeable shift in Q2 2025. According to the latest report from real estate consultancy firm Savills, the market is experiencing a transition from across-the-board rental growth, with rents leveling out in several submarkets.
The report indicates an evolving mix of future supply, marking a significant change from the trends observed in 2024. This transformation is primarily driven by limited new supply and a focus on sustainability, quality, and location.
Dubai's office market is currently characterised by tight supply, high occupancy, and robust rental and capital value growth. The citywide occupancy stands at 92%, with Grade A assets reaching 95% occupancy. Office rents in Dubai have risen 22% year-on-year, averaging AED 190 per sq. ft., with the Dubai International Financial Centre (DIFC) commanding the highest premiums.
However, the pace of rental growth has slowed compared to previous years. Pricing power is increasingly concentrated in assets with strong Environmental, Social, and Governance (ESG) credentials, prime locations, and secure tenant covenants. Investors and occupiers are becoming more selective, favouring properties that offer long-term value, sustainability, and location advantages.
The report also suggests that demand for larger spaces is not explicitly highlighted in current data, but market tightness may be prompting optimization rather than expansion. Expansion into non-Central Business District (CBD) areas is emerging, driven by developer off-plan sales in locations like Arjan and Motor City. This strategic pivot signals confidence in non-CBD locations and could potentially lead to a broader office landscape in Dubai.
Rachael Kennerley, Director of Research at Savills Middle East, commented, "The spillover of demand is supported by the availability of larger spaces in Dubai South and Expo City." She added, "The market continues to see strong appetite for larger office spaces, with 44% of leasing enquiries being for offices between 10,000 and 20,000 sq ft."
The Savills report also highlights that 11 of the 23 submarkets tracked by Savills saw no quarterly change in rents. This allows occupiers to grow as needed while maintaining the benefits of their current lease agreements. The occupiers are waiting for new developments to be delivered before committing to commercial space.
Toby Hall, Head of Commercial Agency at Savills Middle East, stated, "This contrasts to last year's steady and constant growth, suggesting a more cautious approach by some occupiers."
Looking ahead, the market's trajectory suggests continued selectivity among investors and tenants, with a growing emphasis on ESG and location quality. Dubai's 2040 Urban Master Plan aims to build a 20-minute city with commercial activity spread across more areas, which could further support the decentralisation of the market.
The full Dubai Office Market in Minutes Q2 2025 report provides further insights and detailed analysis for those interested in understanding the evolving Dubai office market.
- The evolving Dubai office market, as highlighted in the Savills report, is expected to emphasize environmentally friendly, high-quality properties in prime locations due to the growing interest in Environmental, Social, and Governance (ESG) standards.
- The trend of investing in real-estate in Dubai is showing a shift towards properties offering long-term value, sustainability, and location advantages, with investor and occupier selectivity becoming increasingly pronounced.
- The 2040 Urban Master Plan of Dubai aims to spread commercial activity across more areas, potentially promoting the decentralization of the office market, which aligns with the industry's growing focus on location quality.
- In the upcoming years, the office development in Dubai may see an expansion into non-Central Business District (CBD) areas, such as Arjan and Motor City, as a strategic response to the market tightness and growing demand for larger spaces outside the CBD.
