Analysis Real Estate Dubai WFH push unlikely to curb strong office space demand By Melanie Swan February 2, 2025, 9:45 AM Alamy High demand and a limited pipeline of new office space in Dubai means rents will remain high, despite the government encouraging people to work from home Prime office demand remains high Limited pipeline of new space 30% offer hybrid or flexible working Dubai’s policy of encouraging people to work from home to help curb the city’s growing traffic congestion is unlikely to dent the high demand for office space and rising commercial rental rates, real estate experts say. “Remote work is here to stay, let us it embrace together,” Omar Al Olama, UAE minister of state for AI, digital economy and remote work applications, said in a government white paper published in January. A November government study of 644 private sector companies with about 320,000 employees forecast that if employers offered more flexible working hours — such as up to five days of remote working a month — then it could reduce peak travel time on the emirate’s roads by around a third. However real estate experts say they are not convinced that it would have a major impact on demand for commercial office space. Toby Hall, head of commercial at Savills Middle East, says that recent changes, including working from home and hybrid options, are likely to have “minimal” effect on the emirate’s roads. “Many organisations are adopting more flexible work models. Yet they continue to value having a physical office space to support collaboration, team dynamics, and client interactions,” he says. Ayman Youssef, the managing director at Coldwell Banker, agrees, pointing out that Dubai’s economy thrives on its service industries, such as hospitality, real estate, logistics and retail. These heavily rely on face-to-face interactions and on-ground staff. “While some companies may adopt flexible working hours or hybrid models to accommodate the government’s push, the shift is unlikely to be drastic enough to significantly affect the real estate sector,” he says. “Many businesses in Dubai still value having a dedicated office space to foster collaboration, maintain corporate culture, and ensure operational efficiency.” Youssef says it may yet force a shift in how office space is used, with businesses exploring more flexible layouts or smaller spaces to align with hybrid models. Dubai real estate sector welcomes freehold drive The UAE is the world’s new capital for entrepreneurs Dubai real estate deals surge 20% to record $207bn in 2024 Laura Adams, secondary sales director at Provident Real Estate, agrees that a shift in policy towards more hybrid working has not led to market changes, due to requirements placed on companies in the emirate. A recent Dubai government and Roads and Transport Authority survey showed that 32 percent of private companies have remote work policies, with 31 percent offering flexible working hours. However the impact on demand for office space appears to be minimal. “Office space requirements in Dubai are often tied to visa quotas, necessitating a certain amount of physical office space per employee,” Adams says. “Consequently, even with increased remote working, the demand for office space remains strong.” Limited pipeline The shortage of commercial space continues to impact the industry, with no end in sight. Rosa Piro, senior director of business development and head of research at developer Arada, says that overall market occupancy rates are at 89 percent across all areas of Dubai. That is up from 78 percent three years ago, compared to typical occupancy rates for markets worldwide which range between 75-85 percent. “Further exacerbating the shortage is the limited pipeline,” she says, as developers have taken time to respond to the issue. "That is a result of the historic oversupply in the mid-2010s and due to the impact of the pandemic, with new supply not expected before 2028," Piro says. According to RICS Global Commercial Property Monitor’s latest report for the fourth quarter of 2024, demand for prime office space is the highest since early 2014, with occupancy rates reaching 95 percent or above in parts of Dubai. Hall says that while demand for prime locations is keeping prices high, emerging locations such as Dubai South and Expo City are benefiting. They are increasingly popular due to their affordability, accessibility, and appeal to businesses looking to expand or relocate, he says. Industry experts say that Dubai International Financial Centre office space is currently around AED313 per square foot, while Dubai South is closer to AED98.