Vacancy Rates of Dubai Office Space determine Rentals in Q1 2019

  • July 23, 2019

The decline in rental prices for housing is not the only concern of real estate investors. Increasing vacancy rates are driving office spaces also to lower rental prices.

As UAE relaxes its policy on visas and foreign ownership of companies, there is a promise of real estate prices recovering but it will only be gradual and not as dramatic as developers expect. It also remains to be seen what category of buildings will fare the best on a sustainable basis. On two extremes, affordable and luxury seem to be the most assuring type of properties to do well in Dubai.

Here’s a look at what the supply and performance of office properties look like in Dubai in the year’s first quarter.

Infograph on Office Space in Dubai Real Estate Market



Only one office building was completed in Q1 2019 in Dubai Internet City, bringing the total office stock to around 8.56 million sq m of GLA at the end of the quarter. Currently, there is more than 500,000 sq m of office space under construction and expected to enter the market by the end of 2019, including ICD Brookfield Place in the DIFC (96,000 sq m).

Looking ahead, office supply is expected to reach 9.24 million sq m by the end of 2021, with notable projects including Dubai Hills Square. Multiple projects were revived during the quarter, mainly in Jumeirah Lake Towers, but one has to remain cautious on the delivery of these projects ahead of Expo 2020 as scheduled.


Average vacancy rates in the Central Business District (CBD) increased to 12%. Average Grade A rents declined by almost 9% Y-o-Y to reach AED 1,543 per sq m. With ample choices available for tenants, landlords continue to offer attractive terms and the market is expected to move further in favour of tenants over the next 12 months.

The full effect of the new regulation allowing 100% foreign ownership of companies in the UAE are yet to be seen, but these are expected to have a positive impact in the long run. Demand is also expected to increase with announcements of lower charges by free zones, with Dubai Healthcare City (DHCC) being the latest to reduce fees to improve business competitiveness.

(Source: JLL Research Report)