UAE office rents Q2 2025 have seen an unprecedented jump as both Abu Dhabi and Dubai record historically low vacancy rates. According to the latest report by JLL, office rents in Abu Dhabi increased by 31%, while retail demand in Dubai continues to accelerate, highlighting strong market recovery and growth. Businesses across the UAE are facing intense competition for premium office spaces, and the commercial real estate market is showing clear signs of a landlord-favorable environment.
Market Overview: Q2 2025 Performance
Abu Dhabi
In Abu Dhabi, the citywide office vacancy rate has dropped to 1.5%, with prime office vacancy virtually nonexistent at 0.1%. Grade A office space, which offers modern facilities and prime locations, has a slightly higher vacancy of 1.7%, reflecting continued high demand.
Prime office rents surged to AED 2,905 per square meter per year, marking a 31.5% year-on-year increase, while Grade A office rents increased by 7.8% to AED 1,676 per square meter per year. This sharp growth underscores the intense competition for high-quality office spaces in Abu Dhabi.
Lease renewals are happening more quickly than before, as tenants seek to secure premium spaces amid limited availability. The renewal rate in Abu Dhabi grew by 0.8% in the second quarter, reflecting tenant urgency in a tightening market.
Dubai
Dubai’s commercial property sector is also experiencing strong growth, though at slightly different rates. The citywide vacancy rate in Dubai sits at 7.7%, while prime office vacancy is extremely low at 0.3%. This scarcity has pushed prime office rents to AED 359 per square foot per year, a 17.3% increase from last year. Grade A office rents also saw significant growth, rising by 19.5% to AED 238 per square foot per year.
The competitive market in Dubai is characterized by early lease renewals and increased demand for quality office space. Businesses are prioritizing locations that offer high visibility and modern amenities, fueling the ongoing rise in rents.
Key Factors Driving Office Rent Growth
Limited Supply
A major factor behind the surge in UAE office rents Q2 2025 is the limited supply of available office spaces. Both Abu Dhabi and Dubai are experiencing a shortage of premium office properties, particularly Grade A and prime locations. In Abu Dhabi, minimal new supply is expected until early 2026, which has intensified competition among businesses seeking strategic office locations.
Flight to Quality
Companies across the UAE are increasingly prioritizing high-quality office spaces. Prime offices, which offer modern infrastructure and prime locations, are commanding significant rent premiums. In Abu Dhabi, prime office rents are 73.3% higher than Grade A offices, while in Dubai the premium is around 50.8%. This trend indicates that businesses are willing to pay more to secure premium locations that enhance their brand image and attract top talent.
Economic Growth
The UAE’s strong economic performance is another key driver of rising office rents. A rebound in oil production, resilient non-oil sectors, and rising foreign investment have all contributed to increased demand for commercial real estate. The growth of sectors such as finance, technology, and professional services has created additional pressure on the office market, particularly in prime locations.
Rising foreign investment and business expansion in the UAE have also led to an increase in new office leases and contract renewals, further pushing rents upward.
Retail Market Trends
While office rents are climbing, the retail market in the UAE is also showing dynamic growth, particularly in Dubai. Overall retail contract registrations in Dubai rose by 9% year-on-year in the second quarter of 2025, driven by new leases and renewals. Renewals alone grew by 11.9%, while new contracts increased by 2.3%, signaling strong confidence in Dubai’s retail sector.
In contrast, Abu Dhabi’s retail market showed a 12.1% decline in overall contract registrations. This contrast suggests a shift in retail demand toward Dubai, which continues to benefit from higher footfall, tourism, and a more diversified commercial environment.
Implications for Businesses and Investors
The current trends in UAE office rents Q2 2025 present both opportunities and challenges for businesses and investors:
- For Businesses: Companies looking for office space face rising rents and limited availability. Early decision-making and flexible lease arrangements are essential to secure prime locations. There is a clear incentive for businesses to focus on high-quality, centrally located offices that offer long-term value and prestige.
- For Investors: The UAE’s commercial real estate market presents opportunities for strong rental yields. Limited supply, growing demand, and high-quality property premiums make it an attractive environment for property investment. Investors can benefit from increasing rents, particularly in prime and Grade A office spaces, while retail properties in Dubai also offer strong growth potential.
- Lease Negotiations: With low vacancy rates, tenants have limited negotiating power. Landlords are in a favorable position, and lease agreements are likely to become more rigid, with fewer concessions offered. Businesses must be strategic in securing spaces early and understanding market trends to avoid paying inflated rents.
Future Outlook
Looking ahead, the UAE office and retail markets are expected to maintain growth, although at a potentially slower pace as supply gradually increases. Analysts predict that:
- Abu Dhabi and Dubai will continue to experience high demand for prime office spaces, keeping vacancy rates at historically low levels.
- Retail demand in Dubai is likely to accelerate further, while Abu Dhabi may need additional strategies to attract retail tenants and balance the market.
- Economic growth and foreign investment will continue to support commercial real estate, keeping the market competitive and landlord-favorable.
Developers and property owners are also exploring mixed-use developments and strategic expansions to meet the increasing demand for both office and retail spaces, which could provide more options for businesses over the next 12–18 months.
Conclusion
The UAE office rents Q2 2025 have risen sharply, reflecting strong market fundamentals, limited supply, and increasing demand for high-quality spaces. With vacancies at record lows in both Abu Dhabi and Dubai, the commercial real estate market is proving resilient and attractive for investors. Retail demand, especially in Dubai, continues to accelerate, further signaling the region’s growing economic confidence.
For businesses, securing prime office space is becoming increasingly challenging, emphasizing the importance of early decision-making and strategic planning. Investors, meanwhile, have opportunities to benefit from rental growth, particularly in high-demand, premium properties.
The trends observed in Q2 2025 underscore a clear shift in the UAE real estate landscape toward a market that rewards quality, location, and timely action. Staying informed about these dynamics is essential for businesses and investors seeking to maximize value in the evolving commercial property sector.
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