Dubai Office Market Enters More Balanced Phase in Q2 2026: Savills

DUBAI, UAE – Dubai's office market moved into a more balanced phase during the second quarter of 2026, with occupier demand remaining resilient despite a more measured pace of leasing activity. According to Savills' latest Dubai Office Market Report, the market continues to be supported by sustained demand for high-quality office space, limited Grade A availability and Dubai's position as a leading global business hub.

Data from the Dubai Land Department (DLD) showed that 38,082 office leasing transactions were recorded during Q2 2026, representing a 4% quarter-on-quarter increase. The growth was largely driven by leasing activity in smaller office units, reflecting continued demand from SMEs, start-ups and companies establishing operations in the emirate.

Transactions for office spaces measuring less than 500 square feet increased by 17% compared with the previous quarter and accounted for 66% of all office leasing activity, highlighting the strength of demand from emerging businesses attracted by Dubai's competitive business environment.

New Leasing Activity Continues Despite Longer Decision Timelines

New lease transactions rose by 16% quarter-on-quarter to 27,121, while lease renewals totalled 10,961 during the period.

Savills noted that larger occupiers adopted more cautious decision-making processes amid regional geopolitical uncertainty, with many businesses choosing to prioritise lease renewals, operational flexibility and selective expansions rather than committing to major relocations.

The consultancy believes these occupier requirements have largely been postponed rather than cancelled, supporting expectations that leasing activity will strengthen as regional business confidence continues to improve.

Grade A Office Space Remains in High Demand

Demand for premium office accommodation continued to outperform the wider market, underlining the ongoing shortage of high-quality office space across Dubai.

While leasing activity within the Dubai International Financial Centre (DIFC) is not included in DLD statistics, Savills highlighted that DIFC Square, one of the few major Grade A office developments completed this year, was substantially pre-leased before completion and has continued to attract strong occupier interest.

Similarly, Immersive Tower, scheduled for completion in July 2027, has already secured significant levels of space under offer, reinforcing the continued appetite for future Grade A office supply.

Rental Growth Stabilises

Office rental values also remained resilient during the quarter, with average market rents holding steady at $64.80 (AED238) per square foot, marking the first quarter without rental growth since the first half of 2021.

Rather than signalling weakening market conditions, Savills believes the stable rental performance reflects a period of market normalisation following several years of exceptional growth. Limited Grade A availability and low vacancy rates across Dubai's prime office districts continue to support rental resilience.

Future Supply Expected to Be Quickly Absorbed

Approximately 1.9 million square feet of office space is expected to be delivered across Dubai during 2026, with the development pipeline projected to exceed 4.2 million square feet by 2030.

However, Savills expects much of the upcoming Grade A inventory to be pre-leased or absorbed by existing occupier demand before completion, limiting any immediate impact on market fundamentals and reinforcing the importance of securing premium office space early.

Toby Hall, Head of Commercial Agency at Savills Middle East, said:

"Following several years of exceptionally strong leasing activity and rental growth, Dubai's office market is transitioning into a more balanced phase. While occupiers are taking more time to evaluate their options, demand for high-quality office accommodation remains resilient, particularly within the Grade A segment.

"As regional business confidence improves, we expect occupier requirements that were deferred during Q2 to progressively return to the market. Combined with Dubai's strong economic fundamentals, diversified occupier base and limited availability of prime office space, this is expected to support healthy leasing activity and sustained rental resilience through the second half of the year."

Savills expects demand for Grade A office space and flexible workplace solutions to remain strong throughout the remainder of 2026, particularly from businesses operating in the financial services, technology, trading and professional services sectors. As geopolitical uncertainty eases, existing occupiers are expected to continue driving leasing activity through renewals and targeted expansions, while new entrants gradually return to the market.