JLL’s Real Estate Market Dynamics report showed that office rents across both emirates continued to rise at double-digit annual rates, led by constrained availability in prime districts and a sustained shift by companies towards better-quality workplaces. The pattern reinforced the “flight to quality” that has shaped the UAE’s commercial real estate market since the post-pandemic return to offices gathered pace.
Abu Dhabi’s prime office rents rose 11.7 per cent year-on-year during the quarter, while Grade A and Grade B spaces increased by 5.1 per cent and 4.2 per cent respectively. Dubai recorded sharper rental growth in secondary but well-located stock, with Grade B offices leading the market at 23.4 per cent annual growth, followed by Grade A at 19 per cent and prime offices at 17.2 per cent.
Dubai’s office inventory reached 101.1 million square feet, while Abu Dhabi’s total stock expanded to 4.18 million square metres. Despite new completions, vacancy remained tight by international standards. Abu Dhabi’s citywide office vacancy stood at 1.4 per cent, with prime vacancy at just 0.1 per cent. Dubai’s citywide vacancy rose to 7.3 per cent following fresh deliveries, while prime vacancy edged up to 0.7 per cent.
Taimur Khan, head of research for the Middle East and Africa at JLL, said strong economic fundamentals, agile occupier decisions and landlord flexibility had allowed the office and retail sectors to show “remarkable resilience” during a period of measured market activity. He said demand remained robust, with prime space gaining further support as supply tightened.
The office market, however, also showed signs of caution. Rental contract registrations declined by 6 per cent year-on-year in Abu Dhabi and 7.7 per cent in Dubai. New monthly contracts fell 19.7 per cent in Abu Dhabi and 20.6 per cent in Dubai in March compared with February, suggesting some tenants delayed decisions while assessing the wider economic and geopolitical environment.
Dubai’s 11.2 per cent annual rise in renewals offered a counterweight to softer new leasing activity. The increase indicated that existing occupiers were choosing to retain space rather than risk higher costs or limited availability elsewhere. For landlords, this strengthened income visibility and supported rental resilience, particularly in established business districts where relocation options remained limited.
Retail performance was more uneven. Dubai’s retail stock stood at 56 million square feet, with citywide vacancy tightening to 4.8 per cent, while Abu Dhabi’s vacancy rate remained stable at 8.9 per cent. Community and neighbourhood retail formats continued to benefit from resident demand, while luxury, hospitality-linked and tourism-dependent segments faced greater pressure from weaker visitor flows and cautious discretionary spending.
Dubai’s super-regional malls posted 12.4 per cent annual rental growth, while prime super-regional assets recorded a more modest 1.7 per cent rise. Abu Dhabi’s prime super-regional malls maintained premium positioning, with rents at AED 5,524 per square metre, supported by selective tenant demand and limited high-quality space in dominant destinations.
Retail leasing activity reflected divergent conditions across the two cities. New rental contracts in Dubai fell 9.9 per cent year-on-year, while Abu Dhabi recorded a 3.6 per cent increase in total registrations, helped by a 16.7 per cent rise in new contracts. Negotiations increasingly centred on occupancy-cost ratios, turnover-linked rents and short-term rent relief, reflecting the need for landlords and tenants to share risk during a more uncertain trading cycle.
The broader UAE economy continues to provide support for commercial property, with financial services, construction, manufacturing and business activity underpinning occupier demand. At the same time, regional tensions, travel disruption and supply-chain pressure have complicated the operating environment for developers, retailers and hospitality-linked tenants.
Developers have responded through phased procurement, strategic sourcing and contractor negotiations to manage delivery risks. Landlords, particularly in retail, have adopted more adaptive lease structures to protect occupancy and preserve tenant mix. These measures have helped prevent a sharper slowdown, even as some retailers take a more selective approach to expansion.
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