Dubai's office market remained resilient in Q2 2026, with strong demand for Grade A office space, stable rents, and positive leasing outlook despite a more balanced market.
Dubai's office market entered a more balanced phase during the second quarter of 2026, with occupier demand remaining resilient despite a slower pace of leasing activity. According to Bay point Team, the market continues to benefit from strong demand for high-quality office space, limited availability of Grade A offices, and Dubai's position as a leading global business hub.
Data from the Dubai Land Department (DLD) showed that 38,082 office leasing transactions were recorded during Q2 2026, representing a modest 4% quarter-on-quarter increase. Growth was largely driven by new leasing activity in smaller office units, with transactions for spaces below 500 sq ft rising by 17% compared to the previous quarter. These smaller units accounted for 66% of all office leasing activity, reflecting sustained demand from SMEs, start-ups, and new businesses attracted by Dubai's favorable business environment.
New lease transactions increased by 16% quarter-on-quarter to reach 27,121, while lease renewals totalled 10,961. However, the report notes that larger occupiers adopted a more cautious approach during the quarter due to regional geopolitical uncertainty. Many companies prioritized lease renewals, selective expansions, and operational flexibility rather than large-scale relocations. Bay point believes these requirements have largely been postponed rather than cancelled, with leasing activity expected to strengthen as business confidence improves.
Demand for premium office accommodation remained particularly strong throughout the quarter. Although DLD statistics do not include leasing activity within DIFC, Savills reported that DIFC Square, one of the few major Grade A office developments completed this year, was substantially pre-leased before completion and continues to experience healthy leasing demand. Similarly, Immersive Tower, scheduled for completion in July 2027, already has a significant amount of office space under offer, highlighting continued occupier confidence in future Grade A developments.
Office rental performance also remained resilient. Average office rents held steady at AED 238 per sq ft during Q2 2026, marking the first quarter without rental growth since the first half of 2021. Rather than indicating a market correction, Savills considers this a period of rental stabilization, supported by limited Grade A supply and low vacancy rates across Dubai's prime business districts.
Looking ahead, approximately 1.9 million sq ft of office space is expected to be delivered during 2026, with the development pipeline projected to exceed 4.2 million sq ft by 2030. However, much of the upcoming Grade A inventory is anticipated to be pre-leased or quickly absorbed by existing occupier demand, limiting its immediate impact on market conditions. As a result, businesses seeking premium office space are encouraged to secure leasing opportunities well in advance.
Commenting on the market Ms. Lara L, Managing Director, Bay point Real Estate, said that after several years of exceptional leasing activity and rental growth, Dubai's office market is entering a more balanced stage. She noted that while occupiers are taking longer to evaluate leasing decisions, demand for high-quality Grade A office space remains robust. As regional business confidence strengthens, deferred occupier requirements are expected to gradually return, supported by Dubai's strong economic fundamentals, diversified business landscape, and limited availability of premium office space. These factors are expected to sustain healthy leasing activity and stable rental performance during the second half of 2026.
Overall, Dubai's office market remained stable during Q2 2026, with leasing activity continuing to grow despite more measured decision-making among larger occupiers. The report points to resilient demand for Grade A office space, stable rental levels, and a constrained pipeline of premium supply as key factors supporting the market. Baypoint expects leasing activity to gradually strengthen throughout the second half of 2026 as deferred demand returns and occupier confidence continues to improve.
For more market insights and expert guidance on Dubai's commercial real estate sector, get in touch with the Bay point Team.
The report also highlights that demand for premium office accommodation and flexible workspaces is expected to remain strong, particularly among businesses operating in financial services, technology, trading, and professional services. As geopolitical uncertainty continues to ease, existing occupiers are likely to drive market activity through lease renewals and selective expansions, while new companies are expected to re-enter the market, further supporting leasing demand.