Dubai is experiencing a significant rise in demand for office spaces as international businesses and entrepreneurs are eager to establish a presence in the United Arab Emirates (UAE). Government initiatives aimed at attracting global companies and business travelers have made Dubai a key destination for commercial real estate, with experts predicting that this trend will continue to grow.
Increased Interest in Dubai’s Commercial Real Estate Market
Dubai-based office design and construction company Janat Office Fit-Out has reported a notable increase in inquiries from both local and international businesses. Nadeem Ahmed, CEO of Janat Office Fit-Out, highlighted the rise in demand: “We are contacted daily by businesses worldwide seeking advice on office spaces and local permissions. In the first half of 2023, inquiries have increased fivefold.”
Ahmed added that the interest is not only from new businesses entering the market but also from existing clients who are expanding due to business growth. The surge spans various sectors, including technology, e-commerce, finance, health and wellness, and manufacturing. The majority of inquiries are coming from European-based businesses looking to enter the UAE market, but interest is global.
Shift from Renting to Buying Office Space
While renting remains the preferred choice for many multinational companies, there is a growing trend toward purchasing office space to avoid rising rents. Andrew Elliott, Director of Commercial Agency at real estate advisory firm Chestertons MENA, explained that Dubai’s strategic response to the pandemic made the city a preferred business destination.
“With Dubai lifting COVID restrictions sooner than many other countries, businesses sought alternative locations to continue operations. Coupled with geopolitical factors, Dubai has become a top choice for companies relocating their operations,” Elliott said.
As businesses expand and recruit more employees, the demand for larger office spaces also increases, driven in part by visa regulations tied to office space per square foot. This is creating a greater need for more commercial real estate.
Shortage of A-Grade Office Space in Dubai
Following the 2008 global financial crisis, Dubai had an oversupply of office space, leading developers to focus on residential properties. However, as Dubai’s economic growth accelerates, there is now a shortage of A-grade office premises. This shortfall, combined with increased demand, is expected to push commercial property prices higher in the near future.
To regulate rental prices, Dubai’s government has implemented the Dubai Land Department rental index calculator, which limits rent increases for existing leases. However, prices for new leases remain unregulated, contributing to the growing demand for purchasing office space as a more secure investment.
Dubai’s Travel Boom and Its Impact on Commercial Space Demand
The return of global travel to pre-pandemic levels has also contributed to the surge in demand for office spaces in Dubai. In 2022, Dubai saw 14.36 million overnight visitors, and the number is expected to surpass pre-pandemic levels in 2023. This resurgence is linked to the UAE’s progressive visa policies, which aim to attract skilled professionals and business owners.
Ali Haider, Regional Director of Nomadic, a company specializing in corporate traveler solutions, noted, “The UAE’s travel landscape has returned to pre-pandemic levels and beyond. The country’s attractive immigration frameworks, such as the Golden Visa and the Virtual Working Program, are key drivers for skilled professionals and entrepreneurs.”
Haider added that shorter-term business trips are now extending into longer stays, reflecting a structural change in global travel patterns. This shift is further bolstering the demand for office spaces, as businesses establish longer-term operations in Dubai.
UAE’s Business-Friendly Environment Fosters Growth
The UAE’s proactive approach to fostering business, tourism, and innovation is creating a thriving environment for international companies. With its world-class infrastructure, favourable immigration policies, and business-friendly environment, Dubai continues to position itself as a global hub for businesses and entrepreneurs looking to expand.
As the demand for office spaces grows, Dubai’s commercial real estate market is set to experience significant growth, driven by international interest and the city’s strategic positioning in the global business landscape.
