Abu Dhabi Office Space Demand Surges in Q2 as H1 Market Strengthens

The Abu Dhabi office market recorded sharp rental and occupancy growth in the second quarter of 2025 as demand for Grade A space outpaced supply. This comes as no surprise with the city’s extended efforts to expand its rapidly evolving business districts. The growth of its business districts requires rental spaces to meet its demand.

As seen in our Abu Dhabi Market H1 2025 insights, Abu Dhabi Grade A office spaces, especially those in central business districts and free zones, continue to attract sustained demand and have occupancy close to 100%. These premium assets offer high-quality infrastructure, flexible layouts, ESG compliance, and tenant-focused services.

Key Indicators Driving Office Market Rental Records

Despite broader market challenges in 2024, Grade A spaces have maintained full occupancy rates and stable but increasing rental values, reinforcing investor interest in prime Abu Dhabi commercial real estate even during periods of correction. For instance, the aftermath of the COVID-19 pandemic led to a rise in hybrid work models.

This drove corporates to reshape their real estate strategies, leading many companies to begin to right-size their office footprints, opting for smaller, more efficient spaces. Another factor emerged in the rising vacancy among older or non-prime office buildings. These assets, often lacking modern amenities or sustainability features, became less attractive, resulting in a two-speed market, where older buildings underperformed.

Faced with new challenges, Abu Dhabi rose to turn these obstacles into opportunities and steadily saw a strong office rental growth. As the capital attracts a growing number of international and regional firms, it continues to keep pace with Dubai in the commercial property space as well as with tourism, infrastructure, entertainment, housing, and business.

Abu Dhabi’s Expanding Business Districts

Specifically, the rapid expansion of Abu Dhabi Global Market (ADGM) is drawing major institutions like BlackRock and Morgan Stanley, alongside global asset managers, hedge funds, and alternative capital platforms seeking proximity to the emirate’s $2 trillion sovereign wealth ecosystem and various ministries.

In 2024, ADGM saw a 32% increase in registered firms and a 245% surge in assets under management, with this momentum carrying into 2025 as Q1 licences rose 67%; leading to ADGM office market expansion. Reputed firms have all established a presence, with well-established Family Offices, most notably Bridgewater’s Ray Dalio, alongside rising inflows from Japan, India and China.

Additionally, Al Reem Island recorded the highest transaction volume in H1 2025, driven by mid-tier apartment activity. It led the segment with a price per sqft of approximately AED 1,194, up around 10.7% from H2 2024. This robust activity is backed by affordability relative to luxury

hubs, mature infrastructure, and strong supply from developments like Shams and Reem Hills signal investor preference for communities offering balanced yield and quality of life.

Outstanding Office Market Rental Records

Abu Dhabi’s non-free zone office market has shown a strong recovery since 2020, with occupancy rising from 79.1% to 90.3% by 2024. This rebound reflects broader economic resilience and the success of diversification strategies led by the government. As the emirate cements its role as a regional center for finance, energy, and innovation, demand for office space outside free zones grew, particularly among SMEs, local firms, and public sector tenants.

While office occupancy in Abu Dhabi briefly peaked at 90.5% in 2023 before slightly easing, this minor adjustment points to market stability amid evolving workplace needs and normal lease cycles. The market remains robust heading into H1 2025, supported by high tenant retention, steady demand, and limited oversupply in secondary locations.

Meanwhile, Grade A offices in free zones such as the Abu Dhabi Global Market (ADGM) continue to outperform, with occupancy exceeding 95% due to strong interest from multinationals and financial firms. This highlights a growing divide between premium and secondary office stock.

Overall, Abu Dhabi’s real estate sector remains a key investment destination, backed by solid infrastructure, transparent regulation, and income-generating potential, offering investors both stability and long-term value in a challenging global climate.

Abu Dhabi’s Residential Property Sector Prospers

While the city scrambles to meet the growing demand for premium office space and commercial rental units, there’s no doubt that its housing sector has been setting promising records. For instance, increasing demand for modern lifestyle-oriented units has led to a surge in off-plan residential prices in Abu Dhabi.

The city saw a significant climb from AED 487 per sq. ft. in 2019 to a high of AED 1,350 per sq. ft. in 2024, before easing slightly to AED 1,127 per sq. ft. in 2025. Attractive developer payment plans have also helped alongside growing investor appetite for newly launched stock. Similarly, ready property prices have reached AED 1,086 sq. ft. in 2025.

Buyers' Preferences Shine Through

Whether for long-term investors seeking stability or buyers prioritising usability and returns, the market is increasingly appealing across the board. Rental yields have remained strong, ranging between 5.9% and 6.3% over the past five years. Even during global economic uncertainty, rental income has kept pace with capital growth.

It is clear, based on the data above, that Abu Dhabi has always risen to meet demands with grace and swiftness. This consistency, combined with low transaction costs and zero property taxes, reinforces Abu Dhabi’s standing as a resilient, income-focused market that continues to attract both regional and international real estate investors.

Certainly, the rising office space demand is just another opportunity for Abu Dhabi to compete alongside other prospering cities like its neighbor Dubai. With more non-oil economy growth hitting record highs, Abu Dhabi is well on its way to becoming one of the most appealing cities to live, work, and invest in.

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