JobXDubai

The Dubai office market has witnessed a significant surge in Q1 2024, driven by new businesses establishing operations in the city, according to a report by Savills. Grade A office rentals have registered an average annual increase of 14%, with specific markets experiencing hikes of up to 30%.

Business-friendly initiatives, such as full foreign ownership and changes in residency visa rules, continue to attract overseas investors and businesses, pushing up demand for quality Grade A office space and outstripping supply across all primary submarkets in Dubai.

Rising demand for flexible office spaces, including serviced and co-working spaces, is further fuelling the demand for office spaces in the city. The resilient regional economic rebound and strong demand from overseas investors and businesses are other factors driving up demand in this segment.

The report highlights that demand for office spaces, particularly in areas such as DIFC, has witnessed significant growth driven by new companies entering the market and existing occupiers expanding. This high demand, coupled with a limited vacancy of an average of three percent, led to an average 6% quarterly rental increase.

Other premium developments in the submarket experienced a rental spike of nearly 30% year on year. All submarkets, especially Free Zones like Dubai Internet and Media City, Expo City, and DWTC, are witnessing considerable activity.

The report also notes that Dubai is seeing a rising demand and trend for flexible or serviced office spaces, which is causing the office market to expand, exacerbating the supply-demand imbalance. This trend, combined with record-high new company registrations, presents challenges for firms looking for high-quality office space across the market.

Paula Walshe, Director of Transactional Services at Savills Middle East, commented, “We are seeing a rise in demand for flexible and serviced office spaces, which has resulted in expansion by existing operators in the market already, such as ServCorp, IWG, and the Executive Centre. In addition, we are seeing a raft of new operators entering the Dubai market for the first time.”

The market has seen a significant uptake of space by sectors such as legal services, wealth management, and technology, media, and telecommunication (TMT) companies during the first quarter of this year, with companies from Singapore, China, and the UK leading the leasing activity.

The shortage of Grade A spaces remains a challenge, driving rental values up by 14% on average year-on-year, with some markets such as Jumeirah Lake Towers, Business Bay, Dubai Marina, One Central, and DIFC seeing an even higher rental growth of 20 to 30%.