Dubai commercial real estate: tight supply, strong demand, rising rents

Dubai’s commercial property market entered 2025 with momentum already firmly in place. The key question now is not whether demand exists, but how long current conditions can persist, and where the pressure points are likely to emerge next.

Across offices, retail and logistics, a consistent pattern is visible. Demand is running ahead of supply, and major infrastructure investment is actively reshaping where that demand is directed.

Office shortages are driving pricing and activity

A defining feature of Dubai’s commercial market in 2025 has been the shortage of prime office space.

Vacancies in core business districts such as Dubai International Financial Centre and along Sheikh Zayed Road remain extremely low, with some buildings operating at close to full occupancy.

This imbalance is feeding directly into pricing and transaction activity. In the first half of 2025, 83 offices sales above AED 10 million were completed, compared with 27 during the same period a year earlier.

Downtown offices averaged more than AED 5,000 per square foot, while Business Bay crossed AED 2,000 square foot for the first time. In DIFC, fitted office rents are now averaging above AED 400 per square foot.

This is being driven by genuine occupier demand rather than speculative behaviour, as new businesses enter the market and existing firms expand.

Retail stability is being supported by population and tourism growth

Retail performance in Dubai is proving more resilient than many anticipated. Tourism continues to support footfall, while population growth and rising household spending are providing a stable base of demand.

The evolution of retail formats is also playing a critical role. Lifestyle, entertainment and experience-led concepts help centres remain active and relevant, reducing reliance on traditional retail spend alone. As a result, retail is holding steady rather than overheating.

Industrial and logistics is emerging as the market’s most defensive play

Industrial and logistics assets continue to outperform, supported by structural demand drivers rather than short-term cycles. Average occupancy across industrial assets is around 97%, while logistics rents increased by 33% last year.

These conditions are attracting sustained interest from institutional capital, drawn by long lease terms, strong occupier demand and comparatively higher yields than offices, hospitality or alternative assets like education and healthcare.

For investors, this segment continues to offer income visibility and defensive characteristics, particularly in an environment of limited new supply.

Infrastructure is quietly reshaping demand patterns

Major infrastructure projects are playing a role in redirecting commercial demand.

The launch of Etihad Rail has increased the attractiveness of sites near freight hubs and improved supply-chain efficiency nationwide. Expansion at Jebel Ali Port and KEZAD has also reinforced Dubai’s position as a regional logistics hub.

Meanwhile, the long-term relocation of Dubai’s primary airport to Al Maktoum International Airport is already influencing occupier and investor behaviour. Values of commercial land for sale and rent in Dubai South have begun to rise as businesses position themselves ahead of future demand.

Dubai’s commercial footprint is broadening

While established districts remain dominant, Dubai’s commercial geography is expanding.

DIFC continues to consolidate its role as the region’s leading financial cente, driven by new international entrants. Dubai South is evolving into a hub for logistics, aviation and industrial activity. Al Quoz is also undergoing a transformation, as traditional warehouses give way to creative, retail and lifestyle uses, with occupiers increasingly willing to pay higher rents for central locations.

A market driven by depth, not speculation

Looking ahead, demand across offices, retail and logistics is expected to remain resilient. Prime space continues to lease quickly, often as soon as it becomes available, while rental growth is likely to persist in sectors where supply remains limited.

International companies are central to this momentum. Global banks, consultancies and law firms underpin demand in DIFC, while multinational retailers and distribution groups operate major facilities across the emirate. Their presence provides confidence, sets benchmarks and pulls wider supply chains into the market.

Dubai’s commercial strength is not just a function of scale, but of depth, and this depth continues to support the market’s strong trajectory.