JLL’s latest market report shows demand for premium office space continuing to drive rental growth across Dubai and Abu Dhabi, while retail developers reposition portfolios around community-focused and experience-led destinations.
August 07, 2026 | Tripti Mehta | UAE | Real Estate | 3 Min Read
Image Courtesy: JLL
The UAE’s commercial real estate sector maintained strong momentum during the second quarter of 2026, with demand for premium office space continuing to drive rental growth across Dubai and Abu Dhabi, according to JLL’s latest UAE Office and Retail Market reports.
In Dubai, Grade B office rents increased 31.5% year-on-year, while Grade A rents rose 26.2% and Prime office rents increased 13.6% as limited availability of high-quality office space continued to place upward pressure on rental values. The report also recorded a 24.6% year-on-year increase in new office rental contract registrations, while the overall office vacancy rate declined to 6.1%, down from 7.7% a year earlier. Vacancy across Grade B and Grade C office stock also continued to tighten as occupiers explored alternatives to increasingly scarce prime space.
Abu Dhabi’s office market remained highly constrained, with overall vacancy at just 1.4% and prime office space availability falling to 0.1%. Prime office rents increased 11.7% year-on-year, while Grade A and Grade B office rents rose 5.1% and 4.2%, respectively. JLL noted that the emirate’s Rent Freeze regulation, introduced in June, is expected to constrain short- to medium-term rental escalations.
Commenting on the findings, Mouhammad Takieddin, CEO of Middle East and Africa at JLL, said the UAE’s commercial real estate market continues to demonstrate resilience despite wider global economic and geopolitical uncertainty. “The sustained momentum despite regional volatility reveals the increasing maturity and agility in the UAE’s commercial real estate market. Quality upgrades and delivery pressures are shaping the pipeline dynamics in a highly supply-constrained office market, while retail developers, who are actively future-proofing their portfolios with a domestic-first strategy, are well-positioned to capture the most significant long-term value. Moving forward, the ability to rapidly align asset management strategies with these shifting occupier and consumer demands in an evolving landscape will be crucial in driving sustained portfolio performance,” he added.
JLL said flexible office space is expanding rapidly across both Dubai and Abu Dhabi as AI and automation reshape workforce requirements and businesses increasingly prioritise agility. According to the report, flexible workspaces continue to offer occupiers lower barriers to entry, operational advantages and shorter lease commitments.
The report also highlights structural shifts across the retail sector. In Dubai, stronger demand for secondary regional and smaller-format malls contributed to the citywide retail vacancy rate falling to 4.7%, compared with 8.0% a year earlier. Super-regional malls recorded the strongest annual rental growth at 8.5%.
In Abu Dhabi, community centres emerged as the strongest-performing retail segment, recording 9.3% annual rental growth, underscoring the growing importance of neighbourhood-focused retail strategies. JLL said developers across both markets are continuing to reposition retail assets through diversified tenant mixes and experience-led concepts, including entertainment and food offerings, to strengthen long-term customer engagement while responding to evolving consumer preferences.
Source: JLL UAE Q2 2026 Office Market Report and Retail Market Report.
