In 2025, the United Arab Emirates. The commercial real estate industry in the country acquires amazing power as the real estate markets of both Dubai and Abu Dhabi emerge in unprecedented growth. According to the H1 2025 Office Market Review provided by Knight Frank, two cities are already reporting sales volumes, as well as an increasing rental rate and a healthy pipeline of new builds as indicators of investor confidence in the two cities, and the start of a new phase of growth in the two major Gulf business centers.
Record-Breaking Momentum
Dubai is still ahead in the game as prime office assets in regions such as DIFC, Downtown and Business Bay record their all-time high sales. Office vacancy rates are low and demand is supported by the relocation of regional headquarters and fintech centers and an increasing flow of international companies setting bases in Dubai to operate in the Middle East.
Abu Dhabi does not fall very far behind. Capital markets, which were largely government driven have today become more tenant dynamic with players extending to international corporates, financial institutions, and law firms. Economic diversification that is driven by the capital and underpinned by the Abu Dhabi Global Market (ADGM) and increase of incentives to foreign businesses has seen investors show great interest in premium office space.
The Rents are rising.
The rental rates have also increased in both cities in the first half of 2025. Knight Frank indicates that average Grade A office rents have been going up by over 15 percent year on year in Dubai with some prime areas recording even higher rates. There is always an imbalance between the demand and supply and tenants are increasingly taking long-term leases to enjoy reasonable rates.
Abu Dhabi has also witnessed strong rental increases especially in high-spec buildings on Al Maryah Island and Reem Island. The low vacancy levels have allowed landlords to gain bargaining power and the incentives to rent are starting to become tight.
The development boom: Skyline Redefined
This boost in office markets of Dubai and Abu Dhabi is further fuelled by the growing pipeline of projects in both emirates. Several office and luxury residential towers, either in construction or embarking on the planning process, in Dubai mix office floor space with leisure facilities, integrate green design concepts and have state of the art technology infrastructure. Construction in Abu Dhabi is in Grade A developments to develop both the digital-transformation and green-agenda of emirate. Most of these projects are being developed around the Abu Dhabi Global Market and other free zones and are therefore strategically placed to attract multinational companies that are interested in having a more permanent presence in the region.
Investor Confidence Is Healthy
Aiding this increased activity is a noticeable vote of confidence by international investors. In a new report released by Knight Frank, there has been a spike in deals involving institutions, sovereign funds and real estate investment trusts (REITs) in both markets. Robust economic fundamentals, pro-business policies, and an increased transparency in the regulation of real estate all are conspiring to make Dubai and Abu Dhabi more attractive than ever to long-term capital.
Looking Ahead
The office markets have seen no slackening in cyclical recovery and the structural demand on the basis of new industries such as artificial intelligence, green technology, professional services, and other related activities are being experienced. Not only are these two cities redesigning their city skylines, but they are also redefining how they re-establish themselves as twenty-first century business and innovation hubs.
The report by Knight Frank revealed that the change taking place in Dubai and Abu Dhabi is structural and not cyclical, and investors, developers and tenants have never had it better.
Source – https://www.arabianbusiness.com/industries/real-estate/dubai-and-abu-dhabi-office-markets-boom-as-record-sales-and-new-developments-reshape-skylines-in-2025
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