Dubai Office Market Faces Shortage Until 2027-28 as Demand Outpaces Supply

Dubai’s office market is witnessing an unprecedented surge in demand, leading to one of the highest occupancy rates globally. Despite new office spaces being developed, experts predict a continued shortage until at least 2027-28. With high business activity, inflow of foreign companies, and rapid expansion of key sectors, securing prime office space in Dubai has become a strategic challenge for businesses.
Rising Demand and Limited Supply
According to Cushman & Wakefield Core, new office supply in Dubai is expected to double in 2025, adding approximately 1.66 million square feet. However, this increase will still not be enough to meet the overwhelming demand, keeping the market undersupplied for the next few years. The financial free zone DIFC alone will contribute nearly one-third of the total new office space supply over the next three years, most of which is anticipated to be pre-leased.
Record-High Occupancy Rates
Dubai currently holds the second-highest global office occupancy levels at 92%, with expectations to exceed 94% by the end of 2025. Prime business hubs such as DIFC, Business Bay, and Downtown Dubai report near-full occupancy, while emerging areas like Dubai South and Expo City Dubai are gaining traction due to affordability and availability of space.
Surging Office Rental Prices
The imbalance between supply and demand has driven a sharp increase in rental prices. Office rents surged by 22% year-on-year in 2024, with a further 10-12% increase forecast for 2025. As a result, companies are now exploring alternative locations such as Dubai CommerCity and Expo City Dubai to meet their office space requirements.
Strategic Adaptation by Businesses
With the supply crunch, businesses are adopting new strategies to optimize their workspace needs. Many companies are:
- Maximizing the use of existing office space.
- Exploring co-working and flexible office solutions.
- Relocating to emerging zones where rental costs are lower and space availability is higher.
Dubai’s Thriving Commercial Market
Real estate consultancy Savills reports that Dubai’s commercial real estate sector maintained strong momentum throughout 2024. The Financial Services and Technology sectors continue to drive leasing activity, ensuring that Dubai remains a preferred destination for international businesses.
According to the Dubai Chamber of Commerce, over 51,000 new businesses joined as members in 2024, further fueling the demand for office space.
Conclusion
Dubai’s office market is experiencing a period of unprecedented demand and limited supply, leading to soaring rental prices and near-full occupancy in prime districts. While new office spaces are being developed, the shortage is expected to persist until at least 2027-28. Businesses looking to secure space in Dubai must act strategically, considering alternative locations and flexible workspaces to navigate the supply crunch effectively.
Source: Khaleej Times