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Khaleej Times
6 days ago
- Business
- Khaleej Times
Dubai office rents soar amid tight supply, strong demand
Dubai's office market is thriving, driven by strong demand, limited supply, and a surge in rental prices, positioning the emirate as a global hub for business and innovation. According to Savills' latest Dubai Office Market report, average year-on-year rental price growth soared 45 per cent across various sub-segments in 2025, with key business districts like the Dubai International Financial Centre (DIFC), Business Bay, Downtown Dubai, and TECOM leading the charge. DIFC, in particular, boasts an impressive occupancy rate of 98 per cent, underscoring the intense competition for premium office space. The city's Grade A office spaces are in high demand from both regional and international occupiers, fueled by Dubai's strategic appeal as a gateway to the Middle East, Africa, and Asia. Savills reports a 4.9 per cent increase in net effective occupier costs in Q1 2025, encompassing base rent, fit-out expenses, and other leasing costs. This places Dubai as the eighth most expensive prime office market globally, with average costs of $148.90 per square foot per annum. 'This growth reflects confidence in Dubai's long-term positioning,' said Toby Hall, head of Commercial at Savills. 'Companies view Dubai not just as a regional base but as a global node for innovation, finance, and enterprise.' Core sectors such as financial services, consulting, and technology and media are driving demand, accounting for the majority of market transactions. However, the supply of quality office space remains critically low, with Cushman & Wakefield Core projecting an undersupply until 2027-2028. While new office supply is set to double in 2025, adding 1.66 million square feet, much of this is already pre-leased due to unrelenting demand. DIFC alone will contribute nearly one-third of the city's office supply over the next three years, with most spaces expected to be occupied before completion. Dubai's office market holds the second-highest global occupancy rate at 92 per cent, projected to exceed 94 per cent by the end of 2025. In 2024, office rents surged by 22 per cent year-on-year, with forecasts predicting an additional 10-12 per cent increase in 2025. This growth is fuelled by an influx of new businesses and foreign companies drawn to Dubai's status as a trade, tourism, and financial hub. A CBRE report highlights that the chronic undersupply of quality space in prime locations has intensified competition, pushing rental rates up by over 20 per cent annually and creating challenges for tenants during lease renewals. Despite the tight market, landlords are adapting to meet evolving occupier needs. In established districts, where Grade A stock is scarce, property owners are offering tailored leasing terms, enhanced amenities, and refurbishments to attract tenants. In Business Bay, some strata landlords are now quoting rents comparable to DIFC, reflecting a broader uplift in perceived value across sub-markets. Meanwhile, lease renewals remain a popular choice for businesses, particularly outside DIFC, where Rera rental protections provide stability in a rising cost environment. Occupiers are also prioritizing functional layouts and long-term adaptability over expansive or elaborate office designs, optimizing space usage to align with modern workplace trends. While the outlook for Dubai's office market remains robust, with strong fundamentals and sustained occupier interest, the persistent undersupply poses challenges, as new deliveries in 2025 — approximately 100,000 square metres — are unlikely to alleviate pressure significantly. Most of these spaces will be pre-leased, leaving little room for new entrants or expanding businesses.
Khaleej Times
6 days ago
- Business
- Khaleej Times
Dubai office prices, rents jump by 24% in first 3 months of 2025
Dubai's office market will remain landlord-driven due to limited availability and sustained demand. According to analysts at Cavendish Maxwell, the shortage of Grade A office space is driving spillover demand, pushing prices higher in Grade B and C segments. 'Office sales prices rose 24.5 per cent year-on-year, while rental rates increased by 24 per cent, fuelled by limited availability and sustained demand, especially in Grade A accommodations. Additionally, ongoing shortages of Grade A space are driving spillover demand, pushing prices higher in the Grade B and C segments,' analysts said in the first quarter report. Dubai's office market maintained strong momentum in the first quarter of 2025 as the Dubai International Chamber reported a 39 per cent year-on-year increase in new foreign company registrations, including 11 multinational corporations and 42 SMEs. 'Dubai's office market entered 2025 with strong momentum, supported by steady economic growth, high levels of business formation, and resilient trade performance, all within a stable macroeconomic environment. This foundation is further strengthened by strategic infrastructure development, world-class connectivity, and a pro-business regulatory framework. Together, these factors have driven robust performance in the first quarter of 2025, reaffirming Dubai's status as a leading destination for regional and international capital despite ongoing geopolitical and economic uncertainties,' said analysts at Cavendish Maxwell. In the remainder of 2025, analysts see the office supply pipeline remains robust and may offer some relief to tenants. It is projected that approximately 215,000 sqm of new office space is expected to enter the market; however, actual completions are often lower than projected due to market factors, while pre-booking of units further reduces immediate availability. 'As a result, occupancy rates are expected to remain elevated throughout 2025, supported by strong and sustained demand that continues to outpace supply. Given this supply-demand dynamic, the market is expected to remain landlord-driven, with landlords maintaining significant leverage. Both sales and rental prices are projected to rise further throughout 2025, primarily due to ongoing supply constraints,' said analysts at the property consultant firm. It added that some tenants may downsize or relocate, while others might embrace flexible workspaces or pre-commit to pipeline projects. The office sales market reflected this positive sentiment, with approximately 900 transactions completed in Q1 2025, a 23.7 per cent year-on-year increase, driven by strong activity in both ready and off-plan segments. Notably, off-plan transactions surged, accounting for 18.9 per cent of all deals compared to just 8.1 per cent in Q1 2024, highlighting growing buyer confidence in future developments.
Bloomberg
30-05-2025
- Business
- Bloomberg
San Francisco Office Towers Sell in City's Biggest Deal Since 2022
A pair of San Francisco towers sold Friday in the highest-priced deal for the city's battered office market in three years. The skyscrapers, known as Market Center, were acquired by restaurant franchise magnate Greg Flynn and investment firm DRA Advisors, who took over a distressed $417 million mortgage at a discount. They paid about $177 million, according to a person with knowledge of the matter, who asked not to be named discussing private figures.
