Dubai office renewals rise despite slowdown in new contracts: JLL
Office rental contract registrations declined 6 per cent year-on-year in Abu Dhabi and 7.7 per cent in Dubai
27 May, 2026
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JLL has reported resilient performance across the UAE’s office and retail real estate sectors during the first quarter of 2026, with strong market fundamentals helping cushion the impact of broader regional uncertainties.
According to JLL’s latest Real Estate Market Dynamics report, both Dubai and Abu Dhabi continued to see sustained growth across prime office and retail segments, supported by tight supply conditions, occupier demand and adaptive landlord strategies.
The report highlighted a continued “flight to quality” trend within the office market, while the retail sector delivered mixed performance, with domestically focused retail formats remaining resilient as tourism-dependent categories faced softer conditions.
Taimur Khan, head of research, MEA, JLL, said: “With strong underlying economic fundamentals and agile occupier and landlord strategies, the UAE’s office and retail sectors demonstrated remarkable resilience and a strong capacity for strategic adaptation as they navigated measured activity in the first quarter. Despite short-term adjustments, demand remains robust, signalling the market’s inherent strength and positioning it for sustained growth as demand for prime spaces accelerates amid tightening supply.”
The UAE office sector continued to record strong rental growth, with both Dubai and Abu Dhabi posting double-digit annual increases amid constrained vacancy levels.
In Abu Dhabi, prime office rents rose 11.7 per cent year-on-year, while Grade A and Grade B office spaces increased by 5.1 per cent and 4.2 per cent respectively.
Dubai’s office market also saw strong rental appreciation, particularly within Grade B assets, as occupiers increasingly turned to secondary office space due to limited availability in prime business districts. Grade B office rents climbed 23.4 per cent year-on-year, followed by Grade A at 19 per cent and Prime office space at 17.2 per cent.
Office inventory in Dubai reached 101.1 million square feet during the quarter, while Abu Dhabi’s total office stock expanded to 4.18 million square metres.
Vacancy levels remained exceptionally tight in Abu Dhabi, where citywide office vacancy stood at 1.4 per cent and prime vacancy fell to just 0.1 per cent.
In Dubai, vacancy rates edged slightly higher following new building completions, with citywide vacancy reaching 7.3 per cent and prime vacancy rising marginally to 0.7 per cent.
Despite strong fundamentals, heightened occupier caution impacted transaction activity during the quarter. Office rental contract registrations declined 6 per cent year-on-year in Abu Dhabi and 7.7 per cent in Dubai.
Monthly new office contracts also fell sharply, declining 19.7 per cent in Abu Dhabi and 20.6 per cent in Dubai during March compared to February 2026.
However, Dubai recorded an 11.2 per cent increase in office lease renewals on an annual basis, which JLL said reflected continued occupier confidence despite more cautious expansion activity.
The report noted that global supply chain pressures continue to impact development activity, although developers are responding through strategic sourcing initiatives, phased procurement planning and contractor negotiations.
JLL said transaction momentum is expected to strengthen in the coming quarters as demand for prime office space continues to outpace available supply.
Within the retail sector, Dubai’s existing retail inventory stood at 56 million square feet, while citywide vacancy tightened to 4.8 per cent, reflecting continued occupier demand.
Abu Dhabi’s retail market maintained a stable vacancy rate of 8.9 per cent during the quarter.
The report highlighted the role of government support initiatives, including the Dhs1bn stimulus package, alongside landlord flexibility on lease structures such as turnover-rent models and short-term rent relief in helping stabilise the sector.
Retail rental rates also remained resilient across both markets.
Super-regional malls in Dubai recorded annual rental growth of 12.4 per cent, while prime super-regional retail assets posted more moderate growth of 1.7 per cent.
In Abu Dhabi, prime super-regional malls maintained premium rental positioning at AED5,524 per square metre, supported by selective tenant demand.
Retail leasing activity in Dubai moderated during the quarter, with new rental contracts declining 9.9 per cent year-on-year.
Abu Dhabi, however, recorded stronger leasing activity, with total registrations rising 3.6 per cent year-on-year and new contracts increasing 16.7 per cent.
JLL noted that lease negotiations are increasingly focusing on more flexible commercial structures, including occupancy-cost-ratio (OCR) and turnover-rent (TOR) models.
The report added that retailers are increasingly exploring new revenue opportunities through pop-up destinations, experiential concepts and offerings targeting domestic consumers.
According to JLL, community and neighbourhood retail centres are expected to remain resilient, while experiential retail, home-grown brands and wellness-focused concepts are likely to see stronger demand as consumer preferences continue evolving.
























