
DUBAI AND ABU DHABI
An uncertain landscape
Abu Dhabi and Dubai are experiencing an acute shortage of Grade-A offices, sharpening the debate around whether to stay and upgrade existing space, or search for a new location. While short-term demand is now likely to be impacted by the uncertainty and conflict in the wider region, the focus for occupiers has been on quality of fit outs – both to retain staff, and to meet high client expectations in a location known for luxury.
Despite this focus, average medium-specification fit-out costs across the two cities are AED11,077 per m2, with low labour costs helping to prevent demand-led price rises. This may start to change, if fit-out cost inflation experiences upward pressure from ongoing impact of the war in Iran, particularly if contractors choose to exit the market, and due to the continued reliance of the cities on imported materials.
Prior to the conflict, employers in the United Arab Emirates (UAE) were under pressure to retain talent. Major occupiers, particularly in the technology sector, have been investing heavily in staff wellbeing and office amenities, with the office experience increasingly positioned to compete with working from home. This has included prioritising meeting and collaboration areas, larger pantries, and a more hospitality-led look and experience. Such changes increase fit-out costs through higher-quality finishes, more complex mechanical and electrical provisions, and less standardisation across floors.
Given the shortage of space, the decision for occupiers is whether to risk relocation, which may be time-consuming and expensive, or to try to upgrade current spaces to meet these modern demands, which comes with its own challenges. These include the practical hurdles of retrofitting older spaces, and the functional issues of renovating while try to keep an operational office throughout. In this context, and with the future very uncertain, designing for flexibility is critical, avoiding repeated future alterations and costs, and allowing for space to be sub-let or passed on to future tenants more easily when the time comes to move.