Dubai developers return to selling office space to individual investors
'There was a time when entire office buildings in Dubai were sold off-plan. Over time, the model shifted toward developers constructing buildings solely for rental purposes, moving away from strata ownership,' said PP Varghese, head of professional services at Cushman & Wakefield Core.
'After 2010, we saw a return to strata ownership, where individual investors could purchase office units within developments. However, that again changed following the economic downturn, with developers choosing to retain full ownership and lease to corporate tenants. Independent ownership largely disappeared. Now, we're seeing a shift back — office buildings are being sold off-plan once more, much like residential properties,' he told Khaleej Times.
Varghese attributed this trend to renewed investor confidence in the office sector, supported by strong performance indicators. 'There's a robust belief in the segment, with average occupancy rates hovering around 92 per cent and 95 per cent for Grade A offices,' he noted.
'From 2013 to 2015, confidence in the office market was low, prompting developers to avoid strata sales. But the situation has changed. The market is much more resilient now, and individual investors are re-engaging. That's why developers are reintroducing this product.'
The re-emergence of commercial off-plan sales is primarily occurring in fringe submarkets like Arjan and Motor City, Varghese added.
'While this creates strata-based inventory for small and medium-sized enterprises (SMEs), it doesn't alleviate the shortage of institutionally owned Grade A stock — the type preferred by global tenants and institutional investors,' he said in the firm's mid-year 2025 market update.
Developers are also financially incentivised to pursue sales. 'If developers can achieve the right sales price, they can recover capital faster. From a return-on-investment perspective, it becomes a more lucrative strategy,' Varghese explained.
Landlords in control
Real estate consultancy JLL also reported growing appetite among developers to build new office stock and refurbish outdated assets to take advantage of supply-demand imbalances.
'Landlords are substantially raising quoted rents, creating a widening gap between asking prices and tenant expectations,' JLL noted.
Dubai's office market continues to attract strong interest from both newly established local startups and international corporations looking to establish a presence in the emirate.
According to Cushman & Wakefield Core, key districts such as Dubai International Financial Centre (DIFC), One Central, Sheikh Zayed Road, and Dubai Design District (D3) are nearing full occupancy.
This surge in demand has driven up office rental rates, with average rents reaching Dh190 per square foot — a 22 per cent year-on-year increase. In Q1 2025, prime office rents rose by 14.2 per cent, reflecting robust market conditions.
Real estate brokerage Cushman & Wakefield Core's forecasts indicated that just 0.89 million square feet of new commercial space is expected to be delivered in 2025. However, the pipeline expands significantly in 2026 and 2027, with a combined 6.4 million square feet currently under development.
According to JLL, most of this upcoming supply is concentrated in prime locations and will predominantly feature Grade A specifications.
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