Dubai workers return to office in their droves as rents rise

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• Early lifting of Covid restrictions a major factor
• 90% of UAE workers polled prefer to work from home or hybrid
• London still sees fewer than 40% making the commute

Four in every five professionals in Dubai have returned to the office as Covid restrictions ease. The return is one of the highest rates across the Middle East and Europe.

New research from real estate consultants Savills shows there is significant geographic variation in office utilisation levels.

An average of 80 percent of workers are back in the office in Dubai and over 90 percent in many Chinese cities, yet there are less than 40 percent of workers in the office in the London city submarket and an average of 43 percent in North America.

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• Dubai rents soar by over 20% as inflation bites

Paula Walshe, head of international corporate services, Savills Middle East, said: “Pandemic restrictions in the UAE were lifted relatively quickly compared to other nations, helped by a widespread vaccination programme. 

“Therefore, the shift towards hybrid and flexible working has been scattered among companies, and has mostly been a result of international corporate occupiers putting in place global policies for staff.

“Compared to key office hubs around the world, Dubai offers relatively shorter commute times as office hubs are spread across the city and are easily accessible from key residential areas. 

“Longer commute time is one of the key factors for the adoption of hybrid working in other cities.”

Savill’s figures come despite Cisco’s recent Global Hybrid Work Study that showed 90 percent of employees in the UAE want to work either in a hybrid or a fully remote working model in the future. 

The study, which polled 1,050 full-time employees across the UAE, found that 83 percent of companies are supportive of hybrid work practices.

The Savills findings were part of its Prime Office Costs Q2 2022 report, which showed that inflation and supply chain issues are now feeding into office fit-out costs.

This keeps occupiers’ net effective costs high in many cities around the world. 

Over the past year fit-out costs have risen an average of six percent across the 29 cities tracked by Savills that have so far reported rises.

Proportionally, however, they remain a small part of overall costs compared to rents. 

Several markets are seeing rising rents, especially for ESG-compliant spaces, as occupier demand continues to support the prime end of the market.

Locations including Dubai, Shanghai, Seoul, London, Madrid and Amsterdam also saw headline rent rises over the second quarter of this year, said Savills, although these were often driven by index-linked lease structures.

Dubai prime office costs to occupiers stood at $104.14 per sq ft (psf) in Q2 versus $93.86 psf in Q1, up nearly 11 percent on a quarterly basis and the city takes the 12th spot. 

Hong Kong now sits at the top of the Savills table, with the net effective cost to an occupier to take space in the city having surpassed that in London’s West End.

Tokyo has moved down from third to fifth, allowing Midtown New York and the City of London to move up one position each into third and fourth place, respectively. 

Swapnil Pillai, associate director of research, Savills Middle East said: “Many companies have reconfigured spaces to enable more collaboration.

“Some others have upgraded to better-quality space to attract and retain talent and meet ESG considerations. 

“Rents of prime and Grade A space therefore remain strong, driven by a steady increase in occupier demand amid limited Grade A stock and rising input costs for fit-out and construction.”

In its latest research note, real estate advisors Core said that over 480,000 sq ft of total office space was delivered in Q1, bringing the total Dubai Office stock to 107 million sq ft. 

“Over the remainder of 2022, we expect the much-anticipated Uptown 2020 in Jumeirah Lakes Towers, next phases of CommerCity and the first phase of the District 2020 office portfolio to be brought to market,” Core said.

“Over 2023, we expect One Zabeel, a mixed use development by Ithra and the second phase of the District 2020 office stock to comprise a major portion of the upcoming office supply.”

Meta, previously known as Facebook, opened its regional headquarters in Q1, while Visa had their purpose-built headquarters opening last year.

Many global firms relocating their employees and operations from Eastern Europe and Russia to the UAE is further cementing Dubai’s position as a global commercial and technology hub. 

Core said in addition to 100 percent foreign ownership, ever-evolving visa reforms further attracting international talent, ease of doing business and the efficient management of the pandemic while keeping business continuity at the forefront have made many global occupiers flock to Dubai. 

Robert Thomas, head of agency at Core, said: “We have seen occupancy levels improve steadily over the last few quarters across both Grade A and Grade B stock with Q1 2022 city-wide occupancy levels at 81 percent, the highest it has been in the last five years.”

“A surge in enquiries is coming from EU/UK and other international markets wanting to expand in Dubai due to its favourable and open business environment.

“While hybrid workplace strategies are in place, most firms are bringing their employees back to the office and retaining existing spatial footprint.”