Dubai Office Vacancy Drops Below 5% in DIFC and on Sheikh Zayed Road
New supply is lagging demand: prime-location Grade A rents rose as much as 25% in six months, and the shortage of quality office space is expected to persist until 2027–2028 — a new project takes up to four years to build.
Dubai's office market works differently from residential — supply reacts to demand much more slowly, and that creates long-lasting imbalances.
H1 2024 figures
- New construction: 260 000 sq ft of office space delivered.
- Overall vacancy: 8.2%.
- DIFC and Sheikh Zayed Road: vacancy below 5%.
- Average rent growth: 7.5% over the half-year.
- New premium buildings in prime locations: up to +25%.
The second half of the year was expected to add a further 1.34 million sq ft, including projects in Expo City and Dubai Internet City.
Why the shortage isn't closing quickly
Building an office project takes up to four years. A decision to build made today delivers space, at best, by the end of the decade. Market participants expect the shortage of quality offices to persist through 2027–2028.
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Throughout that time landlords keep the upper hand — international companies entering the market find there's simply no suitable space available.
Side effect: serviced offices
The shortage of classic leases pushed up demand for serviced offices — ready-to-use workspace on flexible terms. For a company it's a way to start operating without waiting; for an investor, a signal of where demand is forming.
What this means for a commercial buyer
- Vacancy below 5% is a landlord's market. Space in these locations leases fast and at rising rates.
- The premium for building class is real. The up-to-25% growth landed on new high-class buildings specifically, not the market as a whole.
- The shortage has a known horizon. 2027–2028 is the point until which the imbalance holds — and after which the numbers deserve a fresh look.
Based on Dubai commercial real estate market reviews for the first half of 2024.
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