6 days ago
Dubai and Abu Dhabi office markets boom as record sales and new developments reshape skylines in 2025
Dubai and Abu Dhabi are experiencing a surge in office market activity, with record sales, soaring rents and a wave of new developments set to transform both cities' commercial skylines, according to Knight Frank's H1 2025 Office Market Review.
In Dubai, 83 office transactions worth more than AED10m ($2.72m) were completed in the first half of 2025 — a 207 per cent jump from the 27 deals recorded in the same period last year.
Downtown led the market, with average prices surpassing AED 5,000 ($1,361) per square foot, while Business Bay crossed the AED 2,000 ($544) per square foott mark for the first time, after 21.2 per cent growth since 2020.
Dubai office demand
Off-plan office sales, concentrated mainly in Business Bay, are on the rise. The submarket is set to deliver more than 1.3 million sqft through this model, reflecting investor confidence in Dubai's prime financial hubs.
DIFC remains the costliest office location in the city, averaging AED 400 ($109) per square foot for fitted offices, while robust rental growth is also being seen in The Greens (AED260/$71psf), Dubai Design District (AED 280/$76psf) and Business Bay (AED251/$68psf).
Demand is being driven by the business services sector (38 per cent of total), followed by tech (31 per cent), real estate (12 per cent) and banking and finance (10 per cent).
Faisal Durrani, Partner – Head of Research, Knight Frank MENA, said: 'Confidence in Dubai as a global business hub remains exceptionally strong. Indeed, this is reflected in record low vacancy rates for Grade A stock across the city, which stands in sharp contrast to many other global gateway cities.
'The technology and trading systems sector has emerged as major driver of demand, while sustained activity from financial, real estate and business consulting firms underscores the city's appeal to a diverse range of global occupiers.
'Developers are moving quickly to capitalise on current demand, with a further 25.2 million square feet expected by 2030, when we forecast the total office stock in the city to approach 148 million square feet.
'The confidence in the office sector is further evidenced by the boom in high-value transactions, with the number of office sales over AED 10 million setting a record of 83 sales in H1 2025.'
The Dubai International Financial Centre (DIFC) recorded its busiest ever first half for new company registrations since opening in 2004, with 1,081 new businesses joining between January and June, bringing the total to 7,700.
Knight Frank forecasts Dubai's total gross leasable area will reach 137.8 million sqft by 2030, with 15.8 million sqft in new supply. DIFC will add more than 7 million sqft of build-to-rent office space by 2030, while Business Bay will see strong build-to-sell activity, much of it sold off-plan before completion.
Abu Dhabi office demand
In the UAE capital, office demand reached over 5 million sqft in H1 2025, up 110 per cent year-on-year. Business services accounted for 32 per cent of demand, followed by government entities (9 per cent).
Durrani said: 'New rental contracts in Abu Dhabi have been a primary driver of market activity this year, with transaction volumes experiencing a significant peak in January, signalling fresh demand and business expansion in the UAE capital.
'Mirroring Dubai, with occupancy levels at record highs across grade-A stock, limited availability is driving up rents for best-in-class space'.
Musaffah led rental growth in Q2 2025 with a 73 per cent quarter-on-quarter rise, followed by Al Bateen (68 per cent) and Al Hisn (19 per cent). Some older districts such as Al Danah (-2 per cent) and Al Nahyan (-7 per cent) saw slight declines due to higher concentrations of secondary stock.
James Hodgetts, Partner – Occupier Strategy & Solutions, MEA, said: 'There is good news on the horizon, with a strong pipeline of high-quality developments poised to be welcome additions to the Abu Dhabi office market.
'This new supply is likely to help ease current constraints, offering occupiers greater choice and setting new benchmarks for quality, sustainability and design.'
New completions are set to ease supply pressure, including Aldar's HB Tower on Yas Island (238,647 sqft) and the Saas Business Tower on Al Reem Island (129,210 sqft).
Shehzad Jamal, Partner – Strategy and Consultancy, MENA, said: 'Demand is expected to remain robust and will likely continue to outpace the delivery of new premium supply for the remainder of the year, fuelling further rental growth in the prime segment across Dubai and Abu Dhabi.
'Pre-leasing activity for the landmark projects scheduled for 2026-2028 will be a key indicator of market sentiment. We expect the performance gap between grade-A, well-located assets and older, secondary stock to widen further as the flight-to-quality trend intensifies in the short-term.'
