Office rents are cooling in Dubai and Abu Dhabi for first time in years, but capital values remain solid

Dubai and Abu Dhabi’s office markets both slowed down in 2Q 2026 — but not in the same way. In Dubai, rents stopped climbing for the first time since 1H 2021, while in Abu Dhabi, leasing volumes fell for the first time in the current five-year cycle. While showing up differently, the cooldown is driven by a singular cause: occupiers, spooked by the regional conflict and ongoing uncertainty, are taking longer to sign off on anything that isn’t a renewal.

In Dubai…

Dubai office rents are stagnating for the first time in five years, with average market rents holding steady in 2Q 2026, according to Savills’ latest Dubai Office Market report (pdf), which frames it as stabilization rather than correction.

Ongoing geopolitical uncertainty and heavy global media coverage of the regional conflict pushed out decision-making timelines, according to the report, particularly for relocations and expansions that need regional or global sign-off.

Some international occupiers weighing new office requirements went into a cautious wait-and-see mode, while existing tenants largely stayed put. Most prioritized lease renewals, selective expansions, and flexible space over the big-ticket relocations that usually define a strong quarter.

Things got worse in 2Q: In the first quarter, when the conflict had only just begun, Savills’ own data shows occupiers still leaning toward caution but not yet retreating. Renewals rose roughly 18% q-o-q, while new leases stayed flat, and rents still saw “pockets of upward movement” in Savills’ own words. By 2Q, once the fuller impact had set in, that pattern reversed entirely — new leases jumped 16%, while renewals fell 16%, and the rental growth that had persisted into the first quarter broke completely.

Even so, capital values didn’t blink: ValuStrat’s 2Q 2026 review (pdf) put Dubai’s office capital-values index at a record 299.5 points, up 3.7% q-o-q and 13.9% annually — even as its median asking-rent gauge fell 6.6% over the same three months. Investors are still paying more for these buildings even as the tenants inside pause.

The leasing breakdown backs up the “paused, not gone” read. Total transactions rose a modest 4% q-o-q to 38k, with new leases doing the work — up 16% to 27k — while renewals fell 16% to 11k. Sub-500-sq-ft transactions, the SME and startup segment, made up 66% of all leasing activity, up from under 60% the previous quarter.

What’s next: Savills expects a gradual pickup in 2H 2026 rather than a sharp rebound as regional confidence improves, with new market entrants — particularly in financial, tech, trading, and professional services — expected to return. Just 1.9 mn sq ft of office space is due to be completed in 2026, rising to 4.2 mn sq ft by 2030.

Over in Abu Dhabi

Abu Dhabi's office leasing market also recorded a y-o-y contraction, with 1H 2026 transactions down 13% to 23.6k, according to Knight Frank’s new Abu Dhabi Residential and Office Market Review (pdf).

The slowdown isn’t even across the emirate. Al Bateen (-35%), Al Hisn (-32%) and Mohamed Bin Zayed City (-16%) posted the steepest June YTD declines, while Musaffah (-12%) and Al Danah (-20%) — still the two busiest leasing districts by volume — experienced more modest drops. Al Reem Island bucked the trend entirely, up more than 148%, as ADGM continued to attract new hedge funds and asset managers. New contracts fell 15% y-o-y, while renewals dropped 8%.

But rents in Abu Dhabi’s best buildings are still surging: Grade A leasing rates climbed sharply in the strongest submarkets: Al Maryah Island up 82% y-o-y, Al Reem Island up 33%, and Corniche/Downtown up 17%. Adnec was the only submarket to fall, down 9%. Occupancy across the market sits around 98%.