Dubai is building three new office towers in the heart of its financial district, expanding to catch up with rising demand in stark contrast to slumping occupancy rates for commercial property in cities around the world.
The DIFC Square will be built within the Dubai International Financial Centre and span 1mn square feet — 60% of which will be dedicated to office space, according to the government communications office. The towers will feature 17,200 square feet of retail space and restaurants, and cost about $270mn to build, DIFC Governor Essa Kazim said in a phone interview.
The buildings are set to be completed in the first quarter of 2026, and will cater to a rush of businesses that continue to flock to Dubai. That influx has boosted the city’s commercial real estate market, helping it rebound from a multi-year slump.
City-wide office occupancy rates have hit an all-time high of 91.3%, according to CBRE Group Inc, at a time when other hubs including London and New York are struggling.
“The demand is there from both incumbent firms that want to upgrade or expand and new companies coming in to set up,” said Taimur Khan, head of research at the global property advisory firm.
That’s partly due to reforms adopted by the United Arab Emirates — of which Dubai is a part — to make it easier for expatriates to work and live in the country. They include widening the eligibility net for long-term visas and abolishing a requirement for companies to have a majority local partner.
In addition, firms have been drawn by a tax-free environment and a timezone that’s conducive for trading with Asia, Europe and the US. Alongside Dubai, neighbouring Abu Dhabi also stands as one of the few bright spots in global commercial real estate.
Office buildings in the Abu Dhabi Global Market (ADGM) in Abu Dhabi.
Within the DIFC, there’s been an influx of asset management and insurance firms, as well as hedge funds. The number of entities registered there rose 34% in 2023 from a year earlier to over 5,500, the free-zone said in February.
“The momentum is still very strong, which is a reflection of the growth in businesses licensed here and the development of the DIFC as an attractive place for hedge funds,” Kazim said. “We have sectors that are growing very fast like wealth and asset management, family offices and fintech.”
Last year 1,500 companies set up in DIFC, Kazim said, adding that the momentum would likely continue. “We don’t foresee a slowdown this year going by the indicative demand of the past six months.”
The DIFC expects to launch one more mixed-use development which will include residential and retail along with office space, possibly this year. Then, all plots designated as part of main business park would have been built.
“After that we’ll need to think about DIFC 2.0,” Kazim said.
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