The high demand for commercial space is driving up rentals as well across the emirate, especially for prime/grade-A offices
Published: Sat 19 Jul 2025,
Dubai’s commercial real estate is booming as vacancy rates are at an all-time low of 8.6 per cent, driven by the inflow of foreign players and the launch of new companies, said Sapna Jagtiani, director and lead analyst, Middle East at S&P Global Ratings.
The high demand for commercial space is driving up rentals as well across the emirate, especially for prime/grade-A offices, she added.
Sapna noted that this strong growth for commercial property is backed by regulations for businesses, a dynamic economic environment, and the low tax that the city offers to businesses.
“Dubai and Abu Dhabi are seeing resilient demand and small rental growth for retail real estate. Prime super regional malls continue to dominate the market, which has led to mall owners expanding their offerings,” she added.
Industry insiders said that popular malls in Dubai have a waiting list for new clients due to the low vacancy rate.
Sapna pointed out that shoppers in the Gulf Cooperation Council (GCC) are looking for unique concepts, new brands, and experiences.
“Urbanisation trends, especially in Riyadh and Jeddah, are driving demand for modern retail formats and omnichannel strategies. Mall owners who fail to stay on trend are likely to face rental pressure and higher vacancies. Luxury spending in the region remains high, driving growth for prime malls. Consumer spending in general, however, remains cautious given economic uncertainty, relatively high interest rates, and inflationary pressure,” she said in the latest notes on the local and regional economic landscape.
Moderate correction
Sapna projected that the Dubai residential property market could see a moderate price correction in 12-18 months. “Dubai could see residential prices fall due to a potentially significant increase in new supply, but the degree of the correction will likely be moderate compared with previous downturns.”
In May 2025, it projected not more than a 15 per cent correction in prices. She added that presales in Dubai are breaking records.
“Demand for residential real estate remains high despite the escalation of Israel-Iran tensions and tariff disruptions. Favourable visa reforms and quality of life continue to attract high-net-worth buyers such that sales volume for luxury units priced above Dh10 million ($2.72 million) has increased by around 60 per cent year-over-year in the first half of 2025,” she added.
Being a safe haven, historically, the UAE and Dubai have benefitted from regional and global geopolitical conflicts, which sparked population growth and investment inflows.
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