AB Majlis podcast: Major London exodus fuels Dubai's premium office boom, says Savills' Toby Hall
Dubai's transformation from a market plagued by office oversupply to a destination that's drawing London's top firms represents one of commercial real estate 's most dramatic shifts, according to Savills Middle East's head of commercial agency.
The emirate's reimagining of premium office space has created such acute demand that some areas are seeing rental values surge by up to 44 per cent year-on-year, with Business Bay emerging as a prime example of this market evolution.
'The levels of demand for offices then versus now just don't even compare,' said Toby Hall, who recently joined Savills Middle East after his tenure in London's West End market. 'There was a huge oversupply of offices then. There were buildings that we thought would never lease, had been empty for years. Those buildings have leased now, and they're renting for two, three times what those rents were.'
This market transformation is epitomized by ICD Brookfield Place, which Hall worked on for seven years during his previous role. 'The specification is far higher than anything else that had been built in the Middle East previously. It's a higher spec building than lots of other cities in world mature markets,' he explained.
Dubai's office market growth
Despite Dubai's soaring rents, the emirate maintains a significant cost advantage over London. Hall pointed out that prime office space in London's key submarkets like Mayfair commands rents of '90 to 100, up to 150 pounds per square foot per annum' – substantially higher than Dubai's premium rates.
The shift isn't just about cost savings. A new breed of office development in Dubai is emphasising sustainability and workplace culture. 'Companies are getting closer to having criteria which they have to tick when they do their office move,' Hall noted, highlighting how sustainability credentials are increasingly driving tenant decisions.
For investors who showed patience during leaner times, the rewards have been substantial. Hall cites a client in DIFC whose office sat empty for five years: 'It rented at 80 dirhams a square foot. Now he's getting 300.'
Looking ahead, Hall identifies a critical supply shortage in Dubai's premium office segment. While new developments are underway, including major projects in DIFC and Dubai Science Park, demand shows no signs of slowing. 'This doesn't seem to be any slowdown in the growth here. The economic growth seems to be continuing,' he said.
The market dynamic represents a stark contrast to London's current situation, where hybrid working patterns have left some areas struggling with occupancy. 'London on a Friday is kind of sad to see sometimes,' Hall reflected, noting how Dubai maintains a more office-centric work culture that continues to drive demand for premium space.
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