Dubai's Prime Office Shortage Drives Commercial Property Surge in 2026

Q: How can a company secure office space in DIFC when vacancy is near zero?

With prime DIFC vacancy at around 0.3%, occupiers are increasingly committing to pre-leases on buildings still under construction, agreeing to longer terms of seven to nine years, or exploring strata purchases of whole or partial floors. Engaging a specialist commercial broker early and considering off-plan pre-commitments is now standard practice for firms targeting DIFC or Business Bay.

Dubai's Prime Office Shortage Drives Commercial Property Surge in 2026

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Dubai's prime office crunch is driving a surge in Grade A commercial property buying and rising rents in 2026.

Grade A office occupancy across Dubai's core business districts is running at 95 to 99 per cent, with DIFC prime vacancy at just 0.3 per cent according to JLL.
Average Dubai office rents rose around 18 per cent year-on-year through 2025, with Business Bay up roughly 46 per cent from prior trough levels.
Office sales above AED 10 million surged 207 per cent year-on-year in H1 2025, with 83 deals completed, according to Knight Frank.
Business services and technology firms account for nearly 70 per cent of total Dubai office demand, with multinationals driving further take-up.
Much of the incoming Grade A supply pipeline is already pre-leased, with no significant vacancy relief expected in the near term.
DIFC office rents have reached approximately AED 537 per square foot, with fitted units in prime towers listing from AED 500,000 to over AED 1.6 million annually.

DIFC and Business Bay at the Centre of Dubai's Office Crunch

Dubai's commercial real estate market has entered 2026 under significant supply pressure, with Grade A commercial property occupancy across key business districts running at near-record levels. The Dubai International Financial Centre (DIFC) is a free zone governed by the Dubai Financial Services Authority (DFSA) under an English-law-based legal framework. It has emerged as the tightest sub-market, with prime vacancy at just 0.3 per cent according to JLL. For multinational firms and institutional investors assessing the UAE, understanding the dynamics driving this shortage is increasingly material to planning decisions.

The Knight Frank Dubai Office Market Review and the CBRE UAE Real Estate Market Review for Q4 2025 both confirm that supply constraints are not unique to DIFC. Downtown Dubai and Business Bay are similarly pressed, with occupancy in top-tier buildings frequently in the 95 to 99 per cent range. This scarcity is reshaping both leasing strategy and investment behaviour across the emirate.

Occupancy and Rents Climb as Supply Falls Short

Dubai's office market has seen average rents rise by around 18 per cent year-on-year through 2025, according to CBRE. Occupancy across Grade A buildings has reached nearly 95 per cent city-wide, with core districts consistently pushing toward full capacity. Cushman and Wakefield Core has warned that demand has been outstripping supply, with much of the upcoming new stock highly likely to be pre-leased well before completion.

JLL data underscores the severity of the squeeze, with prime vacancy at 0.3 per cent and only around 33,000 square metres of new Grade A space due imminently. Occupiers are increasingly committing to longer lease terms in response. Seven- to nine-year agreements are becoming standard for firms seeking security of tenure in preferred buildings. Knight Frank reports that new Grade A stock is typically pre-committed during the construction phase, leaving little completed inventory on the open market.

Commercial Sales Surge as Investors Pivot to Ownership

The shortage of leasable space is translating directly into acquisition activity. In the first half of 2025, 83 office sales above AED 10 million were completed in Dubai - a 207 per cent increase on H1 2024 - according to Knight Frank. Analysts attribute this to corporates and investors choosing to purchase rather than lease, in order to lock in strategic locations and capture rental upside.

Broader commercial sales growth has been equally striking. One market analysis cites year-on-year commercial sales growth of more than 80 per cent, as buyers pivot toward off-plan and income-generating assets. Strata acquisitions, forward purchases, and participation in off-plan schemes are all growing in prominence as conventional leasing options remain constrained.

Who Is Driving Demand - and What Space Costs

Business services account for around 38 per cent of Dubai's total office demand in H1 2025 according to Knight Frank. Technology firms follow at 31 per cent, real estate at 12 per cent, and banking and finance at 10 per cent. CBRE reports growing interest from both regional and international firms using Dubai as a strategic hub for multinational operations and regional headquarters, with new entrants and expanding occupiers both competing for top-tier space.

Rental data from Engel and Volkers illustrates the cost of prime locations in late 2025. Grade A offices in Downtown Dubai averaged around AED 367 per square foot, World Trade Centre stood at AED 268 per square foot, and DIFC rents have climbed to approximately AED 537 per square foot. Business Bay averages around AED 151 per square foot. In DIFC specifically, fitted units in top towers are currently listed at annual rents ranging from around AED 500,000 for smaller offices to AED 1.2 to 1.6 million for larger, prestige spaces.

Pipeline and Outlook for Occupiers and Investors

Knight Frank projects that Dubai's office supply will expand by around 15.8 million square feet by 2030, taking total gross leasable area to an estimated 137.8 million square feet. However, analysts caution that much of this pipeline is concentrated in prestige districts and that tenant pre-commitments are likely to keep effective vacancy low even as new stock is delivered. Companies unable to secure space in core districts are increasingly evaluating emerging locations such as Dubai Science Park and Expo City, which offer modern infrastructure and more competitive rents.

For investors, analysts at TAQ Properties present 2026 as a critical window to act before further market tightening. CBRE data shows Class A occupancy rising from around 90 per cent at end-Q2 2025 to 94 per cent by the close of Q3 2025, a trajectory that leaves little room for those who wait. DIFC's DFSA-regulated environment and English-law ownership structures continue to underpin investor confidence in commercial assets within the free zone, supporting sustained appetite for income-producing offices across the emirate.

What Clients are Asking their Advisors

What does Grade A office space mean in Dubai and why are rents so high?

Grade A office space refers to the highest-quality commercial buildings, typically offering modern specifications, professional building management, and prestigious addresses in prime business districts. In Dubai, extreme scarcity in locations such as DIFC and Downtown has pushed Grade A rents sharply higher, with DIFC now at approximately AED 537 per square foot, as demand from multinational and regional firms continues to exceed available supply.

How can a company secure office space in DIFC when vacancy is near zero?

With prime DIFC vacancy at around 0.3 per cent, occupiers are increasingly committing to pre-leases on buildings still under construction, agreeing to longer terms of seven to nine years, or exploring strata purchases of whole or partial floors. Engaging a specialist commercial broker early and considering off-plan pre-commitments is now standard practice for firms targeting DIFC or Business Bay.

How does Dubai's office market in 2026 compare to other global business hubs?

Dubai's rental surge stands in contrast to many mature global office markets - including parts of London, New York, and various Asia-Pacific cities - where hybrid working patterns have created structural oversupply and softer rents. Dubai benefits from strong population growth, a growing regional headquarters role for multinationals, and near-full occupancy across prime stock, all of which sustain upward rental pressure.

What are the key risks of investing in Dubai commercial office property in 2026?

Key risks include a sizeable development pipeline scheduled for delivery post-2027, which could ease vacancy and moderate rental growth, alongside potential sensitivity to global economic downturns. Investors should also account for higher fit-out costs, rising service charges, and the relative illiquidity of strata commercial assets compared to listed real estate structures.