In 3Q 2025 the new supply remains limited across the UAE for both, office and retail markets, thus pushing both demand and rents up, according to JLL 3Q Office Market Dynamics Report.
OFFICE MARKET
Office vacancies continue to dwindle. Abu Dhabi vacancy stood at 1.5%, down from 4.1% in 3Q 2024, with prime and Grade A office space extremely tight, with the former at 0.1% vacancy and the latter at 1%. Dubai’s office vacancy dropped to 7.1% from 9.7% in the same quarter last year, with prime offices availability at just 0.3% and Grade A building offices at 3.4%.
Hence, landlords are pleased as rents are increasing. In Abu Dhabi, prime rents have soared 31.3% year-to-year to almost 3,000 AED per sqm/278.7 AED sq ft, while Grade A rents rose 3.9% year-to-year, plus also Grade B rents increased by 10% year-to-year. In Dubai, rents in prime offices went up 16.8% year-to-year reached 3,864 AED per sqm/359 AED per sq ft. Grade A office spaces’ rents increased 22.5% and Grade B rents 18.6% year-to-year.
Furthermore, new rental contract registrations plunged, in Dubai 16% year-to-year and 5.6% in Abu Dhabi with the capital also seeing a 4% decline in new contracts and 9.4% fall in renewals. Meanwhile, Dubai registered 4.4% growth in renewals, but a 23.4% fall in new contracts. However, this stems from undersupply rather than weak demand. And interestingly, regional companies are driving force behind more leasing inquiries than international firms.
Moreover, the new office supply remains moderate. Abu Dhabi’s office space stands at 4.1 mil. sqm, with extra 39,000 sqm expected to arrive at the market in 4Q 2025 and additional 124,000 sqm not sooner than in 2027. In Dubai, office space is around 9.3 mil. sqm/100.1 mil. sq ft, with 32,980 sqm/355,000 sq ft expected to come in 4Q 2025, plus 139,354 sqm/1.5 mil. sq ft in 2026, and 130,064 sqm/1.4 mil. sq ft in 2027. Secondary locations will see more new project launches as developers continue looking beyond central business districts. In particular Dubai is experiencing an emerging trend of residential developers expanding into the commercial sector following the strong demand.
As to the foreseeable future prediction, rents could start cooling soon as tenants push back against further increases, according to JLL report. However, the landlord-favorable environment is expected to continue in the short to medium term with a strong demand and limited supply providing landlords the leverage in lease negotiations.
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