Abu Dhabi office market sees surge in demand in H1 2025: Report
A. SREENIVASA REDDY (ABU DHABI)Demand for office space in Abu Dhabi soared in the first half of 2025, with requirements exceeding 5 million square feet, marking a 110% increase compared to the same period last year, according to Knight Frank's Abu Dhabi Office Market Review. Business services remained the largest driver of demand, accounting for 32% of requirements, followed by government entities at 9%.Faisal Durrani, Partner – Head of Research, MENA, said new rental contracts had been a key driver of market activity in 2025, with transaction volumes peaking in January, signalling fresh demand and corporate expansion in the UAE capital. Occupancy levels across the city's Grade A stock remain at record highs, with limited availability sustaining and, in many cases, driving up rents for best-in-class space.The leasing market, however, showed a mixed performance across submarkets in the second quarter. Musaffah led quarter-on-quarter rental growth with a 73% increase, followed by Al Bateen at 68% and Al Hisn at 19%. More established districts such as Al Danah and Al Nahyan experienced minor corrections, with rents slipping by 2% and 7% respectively, reflecting a higher concentration of older, secondary stock that is less favoured by occupiers.James Hodgetts, Partner – Occupier Strategy & Solutions, MEA, noted that there is 'good news on the horizon' with a strong pipeline of high-quality developments poised to enter the market. This new supply is expected to ease current constraints, offer occupiers greater choice, and set new benchmarks for quality, sustainability and design. Immediate completions include Aldar's HB Tower in Yas Island, providing 238,647 square feet of Grade A space, and the Saas Business Tower on Al Reem Island, delivering 129,210 square feet. Both developments are positioned to appeal to international and domestic corporate occupiers seeking flagship office environments.The supply pipeline points to a surge in new stock from 2027, with nearly 175,000 square metres of office space scheduled for delivery that year, following more modest additions of around 51,000 square metres in 2025 and just over 43,000 square metres in 2026. Shehzad Jamal, Partner – Strategy and Consultancy, MENA, said: 'Demand is likely to remain robust and continue to outpace the delivery of premium supply for the rest of the year, fuelling further rental growth in the prime segment. Pre-leasing activity for landmark projects scheduled for 2026–2028 will be a key indicator of sentiment, with the performance gap between Grade A, well-located assets and older secondary stock expected to widen as the flight-to-quality trend intensifies.'In Dubai, the Dubai Office Market Review showed record high-value transactions, with 83 office sales over Dh10 million in H1 2025 — a 207% jump from H1 2024. Average prices in Downtown climbed above Dh5,000 per square foot, while Business Bay surpassed Dh2,000 per square foot for the first time. The business services sector drove 38% of Dubai's total demand, followed by technology (31%) and real estate (12%).Durrani said Dubai's Grade A vacancy rates were 'at record lows,' contrasting with other global gateway cities, while Adam Wynne, Partner – Head of Commercial Agency, UAE, noted strong occupier demand for entire floors or buildings in upcoming developments.
Knight Frank forecasts that by 2030, Dubai's office stock will reach nearly 148 million sqft, supported by more than 25 million square feet of new supply, much of it already being sold off-plan.
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