Many commercial tenants in Dubai have been relocating to less expensive districts and locking in extended agreements before the upcoming rollout of the commercial rental index.
According to market observers, numerous landlords are raising prices in popular locations to establish higher benchmarks prior to the index’s official release.
Commercial Rental Index on the Horizon
The Dubai Land Department (DLD) is set to introduce this new system for commercial properties in the first quarter of 2025. This follows DLD’s recent launch of a smart rental index for residential spaces, which uses artificial intelligence to create fair valuations for tenants.
Tenants’ Response
Some occupants are renegotiating contracts in advance, signing longer leases to secure current rental rates, or asking for flexible payment schedules. Others are opting to move to more budget-friendly neighbourhoods, downsize their premises, or shift to co-working facilities to manage expenses.
Landlord Strategies
In high-demand spots, many landlords have already hiked rents to lock in higher base figures before the index takes effect. They are also upgrading properties and adding new features to keep them appealing in a potentially more transparent market.
Demand for Grade A Offices
Dubai’s commercial real estate market saw over 9,000 transactions in 2024, marking a 24 per cent jump year-on-year. The total value soared to Dh90.1 billion, an 11 per cent increase.
Premium office supply remains limited, with occupancy rates of over 95 per cent in areas like DIFC, Downtown Dubai, Business Bay, and Sheikh Zayed Road.
Future developments — including One Za’abeel Tower, Al Wasl Tower, and DIFC 2.0 — are expected to add over nine million square feet of office space by 2028, yet demand remains higher than what’s available.
Key Takeaway
Businesses across Dubai are acting swiftly to manage costs and secure stable rents by moving to more cost-effective locations or closing long-term lease deals. Landlords in prime areas are taking advantage of current market conditions to set higher prices before the commercial rental index arrives.
JobXDubai 
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