Ready Office at 3% or Off-Plan at 12%: Why Investors Still Choose the Lower Yield
Rising rents have pushed ready Dubai office prices so high that buying outright now yields just 2-3% a year. An off-plan office at AED 1,360/sqft with a forecast AED 200 rent pencilled out to a 12.3% ROI. Here's what pays for that gap.
Dubai's office market currently has a striking split: a ready building and an off-plan one can produce returns that differ by several multiples. Here's both sides of the trade — and what actually pays for the gap.
The ready office
A large share of office-buying enquiries are for ready space bought for rental income, and buyers are often willing to pay 100% of the price upfront. The problem is price: rising rents (roughly 22% growth in 2024 alone) have pushed owner expectations so high that yields on a cash purchase have fallen to 2-3% a year.
With vacancy running around 8% citywide and just 2% in the financial centre, sellers have no reason to negotiate — a buyer will turn up regardless.
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The off-plan office
A sample calculation for an office block in a district that led the residential sales charts:
- Purchase price: AED 1,360 per square foot.
- Completion: 2028.
- Projected rent: AED 200 per square foot a year.
- Payback period: roughly 6.8 years.
- Projected ROI: 12.3%.
Add to that no broker commission on a purchase from the developer, and an interest-free payment plan through construction.
What pays for the gap
A fourfold difference in yield isn't a market inefficiency — it's compensation for risk, and that risk has specific components:
- Time. Two to three years with zero income.
- Developer risk. A delayed handover or an unfinished project is the main loss scenario on off-plan.
- The projected rent. AED 200 per square foot is an assumption about the 2028 market, not a fact — it should be checked against current rents in the same district, not downtown.
- Fit-out. Shell-and-core delivery means a substantial spend is still needed before the first tenant moves in.
- Liquidity. Reselling an off-plan office before handover is harder than selling a ready one with a tenant in place.
The takeaway
Both options work — they just answer different questions. A ready office with a tenant is a bond: low yield, immediate cash flow, understood risk. An off-plan office is a venture bet on a market you already understand: high projected yield, deferred cash flow, developer risk. The mistake is buying the second while expecting the characteristics of the first.
Based on 2024-2025 vacancy and rent data for Dubai's office market and a seller's calculation for a specific off-plan project.
Video on this topic
The same subject on the English channel — each clip has a written version of its own.
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