Dubai's office market entered a more balanced phase in Q2 2026, with rental growth pausing for the first time since 2021 even as demand for premium office space remained resilient and leasing activity continued to rise.
July 24, 2026 | Tripti Mehta | UAE | Real Estate
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Dubai's office market entered a more balanced phase during the second quarter of 2026, with average office rents holding steady at AED 238 per sq ft, the first quarter without rental growth since the first half of 2021, according to Savills' latest Dubai Office Market Report. The consultancy said the pause reflects rental stabilisation rather than a market correction, supported by limited Grade A availability and persistently low vacancy across prime office locations.
Dubai Land Department (DLD) recorded 38,082 office leasing transactions during Q2 2026, representing a 4% quarter-on-quarter increase. Growth was driven primarily by demand for smaller office units, with transactions below 500 sq ft rising 17% quarter-on-quarter and accounting for 66% of all leasing activity. Savills attributes this trend to continued expansion by SMEs, start-ups and new businesses establishing operations in Dubai.
Leasing activity also shifted towards new occupiers during the quarter. New lease transactions increased 16% quarter-on-quarter to 27,121, while 10,961 lease renewals were recorded. According to Savills, larger occupiers adopted longer decision-making timelines amid regional geopolitical uncertainty, with many prioritising lease renewals, selective expansions and operational flexibility instead of major relocations. The consultancy believes these occupier requirements have largely been deferred rather than cancelled.
Demand for premium office space continued to outperform the broader market. Although DLD data excludes leasing activity within the Dubai International Financial Centre (DIFC), Savills reported that DIFC Square was substantially pre-leased ahead of completion, while Immersive Tower, scheduled for completion in July 2027, already has a significant volume of space under offer. The activity highlights continued occupier appetite for future Grade A office supply despite broader market moderation.
Looking ahead, approximately 1.9 million sq ft of office space is expected to be delivered during 2026, with Dubai's development pipeline projected to exceed 4.2 million sq ft by 2030. However, Savills expects much of the forthcoming Grade A supply to be pre-leased or quickly absorbed by existing occupier demand, limiting its immediate impact on market conditions.
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."
He added that deferred occupier requirements are expected to return as regional business confidence improves, supported by Dubai's strong economic fundamentals, diversified occupier base and limited availability of prime office space.
The latest Savills findings suggest Dubai's office market is entering a healthier stage of maturity rather than slowing. While rental growth has stabilised after four years of sustained increases, demand continues to concentrate around high-quality Grade A assets, reinforcing the widening performance gap between premium office stock and older commercial buildings. With much of the future pipeline expected to be committed before completion, occupiers seeking prime space may continue to face limited availability despite new supply entering the market.
Source: Savills Middle East – Dubai Office Market Report Q2 2026.
