Dubai Tenants Move to Affordable Areas and Lock in Long-Term Leases as Commercial Rental Index Approaches
As Dubai prepares for the launch of its commercial rental index in the first quarter of 2025, tenants are reacting to anticipated market changes by relocating to more affordable areas, renegotiating leases, and securing long-term agreements to lock in current rates.
Industry experts note that landlords are proactively raising rents, especially in prime locations, ahead of the new rental index's implementation.
The Dubai Land Department (DLD) is also set to launch a rental index for commercial properties, following the successful introduction of a smart rental index for residential properties earlier this month. The new index, powered by AI, aims to provide fair and accurate property valuations, offering transparency to both landlords and tenants.
According to Ben Bargh, managing director of Commercial Real Estate Consultants (CRC), a growing trend is emerging where tenants are opting for longer-term leases to avoid fluctuating rents, while others are downsizing or switching to co-working spaces to manage costs. 'Many landlords are focusing on upgrading their properties to attract higher-value tenants, particularly those seeking sustainable, premium office spaces,'
Bargh explained.
Dubai's commercial real estate market has seen remarkable growth, with 9,038 transactions recorded in 2024, a 24% increase year-on-year, and a total transaction value of Dh90.1 billion. However, the city faces a significant shortage of premium office spaces, especially in high-demand locations like DIFC and Downtown Dubai, where occupancy rates exceed 95%. This shortage, along with the limited supply of Grade A office spaces, is expected to maintain pressure on rental rates moving forward.
News Source: Khaleej Times
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