Market Trends of UAE Flexible Office Space Industry
Dubai is Experiencing a Surge in Demand for Flexible Office Space
Dubai's co-working space market is rapidly growing, driven by its unique environment that promotes networking, collaboration, and innovation—advantages often missing in traditional office settings. Leading this expansion, Dubai offers modern, well-designed co-working spaces at competitive rates. Key players in the market include Astrolabs, Regus, The Co-Dubai, Nook, and WeWork.
Startups, entrepreneurs, and SMEs are increasingly drawn to these flexible spaces. For instance, in January 2023, the Bureau Business Center introduced the UAE's first female-focused co-working space in Dubai's Gold & Diamond Park, providing tailored amenities to support women in entrepreneurship.
As the number of SMEs and startups rises, Dubai's co-working market is set for continued growth. Ranked 18th globally for flexible office spaces, the city benefits from a robust economic recovery and favorable regional conditions, enhancing its appeal as a hub for Middle Eastern ventures.
In May 2024, South Korea's Ministry of SMEs and Startups (MSS) and the UAE Ministry of Economy signed a Memorandum of Understanding (MOU) to establish the South Korea-UAE SME and Startup Committee. This first-of-its-kind committee aims to bolster bilateral cooperation in the SME and startup sectors through information exchange, institutional collaboration, and infrastructure development.
In the first quarter of 2024, Indian businesses led the list of new companies joining the Dubai Chamber of Commerce, with 4,351 new members. This was followed by Pakistani companies (2,222), Egyptian companies (1,404), and Syrian companies (736). The United Kingdom and Bangladesh also saw significant new memberships, with 698 and 635 new companies, respectively.
The top sectors for new memberships were trade and services (42.3%) and real estate, renting, and business services (33.9%). Other notable sectors included construction (9.2%) and transport, storage, and communications (8.1%).
FDI Surge and Grade-A Offices Demands Propelling UAE Flexible Office Space Market
As of May 2024, Abu Dhabi and Dubai witnessed significant demands for Grade-A office space due to expanding business activities and supportive government policies.
In Abu Dhabi, the demand is surging, with key locations like Maryah Island, Capital Centre, Masdar City, and Al Raha in high demand. Prominent assets such as the Abu Dhabi Global Market and the International Tower are nearing 95% occupancy. Over 90,000 square meters of new Grade A office space is under development and expected by 2026. Rental rates have risen by 1% quarterly, with ADGM seeing increases of up to 30% annually.
In Dubai, Grade-A office space demands have led to a 14% year-on-year rental growth, with some markets experiencing spikes of 20% to 30%. High-demand areas like DIFC have seen a 6% quarterly increase, and premium developments have shown nearly 30% year-on-year growth. Free Zones like Dubai Internet and Media City, Expo City, and DWTC are also active.
In 2023, the United Arab Emirates ranked as the third-largest global foreign direct investment (FDI) market, attracting USD 23 billion across 1,277 projects. This success highlights the country’s appeal due to investor-friendly policies, such as 100% foreign ownership and relaxed visa restrictions. With targets of AED 550 billion (USD 150 billion) in FDI by 2030 and AED 1 trillion (USD 270 billion) by 2051, the United Arab Emirates continues to attract substantial investments despite global FDI declines. The UAE’s focus on innovation and strategic partnerships, including comprehensive economic partnership agreements (CEPA), further boosts its attractiveness.
The surge in FDI, driven by sectors like legal services, wealth management, and technology, is heightening the demand for flexible office spaces. As global firms from Singapore, China, and the United Kingdom expand in the United Arab Emirates, the need for adaptable, cost-effective work environments is growing, fueling the expansion of co-working and flexible office spaces in the region. For instance, Three Arrows Capital, a crypto hedge fund, relocated its headquarters from Singapore to Dubai in 2022.
In response, the UAE's flexible office space market has expanded. Dubai CommerCity partnered with IWG to launch Spaces CommerCity, and Letswork, a co-working marketplace, has grown from zero to over 55,000 users across the United Arab Emirates and beyond. This growth highlights the need for adaptable, high-quality work environments, with technology and digital solutions pivotal in meeting evolving business needs.
