Dubai’s office sector sustained momentum in the second quarter of 2025, supported by restricted supply and continued international demand, according to Savills’ latest market report.
“Rents appear to have levelled out in some submarkets with 11 of the 23 submarkets tracked by Savills having 0 per cent quarter-on-quarter change in rental rates, likely a result of many tenants adopting a holding pattern and limited market movement. Rents remain up 36 per cent year-on-year on average,” the report said.
Submarkets such as Dubai Silicon Oasis, Barsha Heights, Business Bay and Studio City recorded rental growth of 10 per cent or more in Q2 2025.
Dubai sees rise in foreign company registrations, led by India and Pakistan
The Dubai Chamber of Commerce reported that India led overseas company registrations in Q1 2025, with 4,543 new businesses.
Pakistan followed with 2,154 registrations, and Egypt with 1,362. Other countries in the top 10 included Bangladesh, the United Kingdom, Syria, Jordan, China, Türkiye, and Iraq.
According to the report, “most new leases are being signed by new market entrants or by companies expanding their footprint,” with 44 per cent of Savills’ Q2 enquiries for spaces ranging between 10,000 and 20,000 sq ft. Enquiries for units below 10,000 sq ft represented 38 per cent.
Renewals accounted for 41 per cent of transactions, followed by relocations (29 per cent), new entry (12 per cent), surrender (12 per cent), and expansion (6 per cent).
Landlords are showing preference for tenants with regional track records or international presence. “Landlords remain mindful of a covenant strength, tenant profile and alignment with existing occupiers to ensure a balanced tenant mix,” the report said.
Occupiers are also favouring buildings with established reputations or institutional landlords.
In Q2 2025, 84 per cent of Savills’ transactions involved companies in financial services, consulting, and technology and media sectors.
Many occupiers are adopting a wait-and-see approach due to limited availability of sustainable or ESG-compliant space.
Some tenants are securing right of first refusal on additional space within their current buildings, enabling limited expansion while retaining RERA protection.
“Flexible space continues to be used to accommodate supplementary requirements,” the report added.
Approximately 1 million sq ft of new stock is expected in late 2025 and early 2026, with pre-commitments absorbing much of the pipeline.
Key upcoming developments include Wasl Tower, Immersive Tower, DIFC Square, Sweid One, Uptown Towers, and Capital One.
Developers traditionally focused on residential projects are exploring strata office buildings, which could shift supply dynamics and support the Dubai 2040 Urban Master Plan’s vision of a 20-minute city.
At a macro level, Oxford Economics revised the UAE’s GDP growth forecast to 5.1 per cent for 2025, up from 4.7 per cent, citing oil sector recovery and non-oil GDP growth.
However, S&P Global’s UAE PMI fell to 53.3 in May, the lowest since September 2021, indicating potential pressure on short-term sentiment.
President Trump’s visit in May 2025 and the launch of the US-UAE AI Acceleration Framework is expected to strengthen bilateral ties and support further trade and investment flows.
Business Bay, Silicon Oasis drive Q2 rental increases in Dubai
Submarkets with stable quarter-on-quarter rental rates in Q2 2025 included Healthcare City, Downtown Dubai, Al Barsha, JLT, Dubai Marina, Sheikh Zayed Road, DAFZA, Garhoud, Bur Dubai, and Dubai Production City.
Rental growth was highest in Dubai Silicon Oasis (13 per cent), followed by Al Barsha Heights (12 per cent), Business Bay (10 per cent), and Dubai Studio City (10 per cent).
Other increases were recorded in Dubai Design District (9 per cent), Deira (8 per cent), Dubai Investment Park (7 per cent), One Central (6 per cent), and Dubai Science Park (5 per cent).
TECOM DIC/DMC/DKV and DIFC saw more modest increases of 3 per cent and 2 per cent respectively.
New areas such as Dubai South and Expo City are expected to see more demand due to greater availability, affordability and improved access.
“Geopolitical uncertainty may also influence activity, as some European and US firms pause overseas investment due to domestic economic pressures and regional volatility affecting sentiment. Demand is expected to grow in submarkets such as Dubai South and Expo City, driven by greater space availability, affordability, and improved accessibility,” the report said.
