Interview: Dana Williamson – No let-up in demand as Dubai tightens and Riyadh reshapes regional strategies
JLL’s Dana Williamson outlines how Gulf real estate is being reshaped by severe supply shortages, surging demand for Grade A space, and the rapid rise of logistics and data-centre investment. Interview by Jason Mitchell.
Dana Williamson, head of offices, business space and retail MENA at JLL, advises global corporates and investors across some of the world’s most dynamic commercial markets, from Dubai and Abu Dhabi to Riyadh and Jeddah.
In this interview, she explains why Dubai’s office rents continue to climb, how the UAE’s logistics and mixed-use sectors are absorbing exceptional levels of demand, and how Saudi Arabia’s regional-headquarters policy is redefining corporate footprints across the Gulf. She also discusses the financing pressures facing developers, the evolution of “smart logistics”, and why industrial, data centre and mixed-use assets are set to lead performance through 2027.
How sustainable is Dubai’s office market momentum, given record-low vacancies, rising rents, and a limited pipeline of new Grade A supply?
Currently, Dubai’s prime office space vacancy stands at a mere 0.3%, with citywide vacancy at 7.7%. The market strongly favours landlords, a trend expected to persist in the short and medium term. The limited Grade A pipeline, with only 33,000 sq m forecast for immediate completion against the current stock of 9.3 million sq m, ensures continued scarcity. JLL observes sustained strong demand from both existing and new market occupiers, indicating highly sustainable office market momentum in the medium term, underpinned by structural supply-demand imbalances.
Prime rents have increased by 17.3% year-on-year to AED359 per sq ft [AED3,864 per sq m], reflecting genuine market fundamentals rather than speculation. This is evidenced by occupier clients committing to longer-term contracts, averaging seven to nine years, compared to the three to five-year average a few years ago.
Dubai’s office market sustainability is driven by economic diversification initiatives and corporate expansion, creating authentic occupier demand. However, landlords should exercise pricing discipline, as even well-capitalised tenants are becoming increasingly price-sensitive.
How are office tenants in the UAE adapting their leasing strategies – are occupiers prioritising flexibility, sustainability, or long-term security as rents climb?
In 2025, Dubai’s office market has witnessed a notable shift in tenant behaviour. Renewals have surged by 6.1%, while new lease contracts have declined by 21.1%. This trend suggests a dual interpretation: occupiers may be prioritising the security of their current locations in a tight market, or they could be facing limited relocation options due to market constraints.
The emergence of a “flight to certainty” strategy underscores the current market dynamics. With prime vacancy rates at unprecedented lows, tenants are proactively pursuing early renewals to mitigate the risk of entering competitive bidding scenarios for new spaces.
Sustainability has become a key differentiator in the market, commanding substantial premiums. LEED Platinum-certified buildings are achieving impressive rent premiums: 26.4% higher for prime spaces and a remarkable 38.6% for Grade A properties.
This strategic shift in tenant behaviour represents a prudent approach to risk management. By securing high-quality space at known price points, occupiers are effectively hedging against potential cost escalations in future leasing cycles. This strategy aligns with the broader trend of long-term planning and financial stability in an increasingly competitive real estate landscape.
Beyond offices, which segments of the UAE commercial market – logistics, retail, or mixed-use – show the strongest fundamentals heading into 2026, and why?
Mixed-use developments exhibit the most robust fundamentals, with the UAE’s projected construction spend reaching $192.7 billion from 2025-2030, accounting for 41% of total real estate project value. This segment capitalises on integrated demand drivers: the synergy of residential, commercial, and retail components generates diversified revenue streams and mitigates vacancy risk.
The logistics sector closely follows, demonstrating strong occupancy rates. Dubai’s industrial sector boasts a 94% occupancy rate across 25.26 million sq m of supply, propelled by e-commerce growth and the emirate’s position as a regional trade hub. Premium Grade A logistics assets in strategic locations such as JAFZA and Dubai Investment Park achieve near-full occupancy (97-100%) with rents reaching AED48 per sq ft [AED517 per sq m].
In the industrial sector, logistics remains the preferred choice for most investors, driven by high demand from online retailers and population growth across the Middle East. This trend is projected to continue, with double-digit rental growth anticipated in the coming years across Dubai, Abu Dhabi, and Saudi Arabia. The persistent supply shortage is expected to exert further upward pressure on rents.
The scarcity of Industrial asset supply across markets has resulted in build-to-suit opportunities often being the sole option for tenants. While smaller multi-let industrial facilities are in demand, there is a noticeable lack of high-quality supply, particularly in proximity to city centres. The growing emphasis on ESG and sustainability among tenants is expected to drive improvements in building quality. Moreover, stricter tenant protocols now necessitate meeting ESG criteria to secure board approval for leasing.
The retail sector presents a more nuanced landscape. Prime malls maintain a low vacancy rate of 2.1%, while community centres experience higher vacancies of around 11.4%. This disparity underscores the bifurcation between destination retail and convenience-based formats in the market.
How is Saudi Arabia’s regional headquarters policy reshaping corporate real-estate strategies across the Gulf, and what impact is it having on leasing patterns in Riyadh and Jeddah?
The regional headquarters policy has significantly influenced corporate decision-making processes in the Gulf, driving substantial increases in demand for corporate office space in Riyadh. This surge has led to remarkably low vacancy rates, particularly in prime districts such as the King Abdullah Financial District, where vacancy rates have plummeted to sub 1%.
Saudi Arabia’s mandate for regional headquarters is generating far-reaching effects across Gulf commercial real estate strategies, compelling multinational corporations to establish substantial presences in Riyadh and fundamentally reshaping space allocation decisions throughout the region. This policy shift has given rise to a “hub-and-spoke” model, wherein companies maintain operational headquarters in Saudi Arabia while strategically rightsizing satellite offices in other Gulf cities, including Jeddah.
The policy’s impact on corporate office establishment in the capital has had cascading effects on demand for high-quality housing, encompassing apartments and townhouses both within and outside of compounds, as well as other mixed-use developments. We foresee continued robust investment in Riyadh’s infrastructure, as evidenced by the recent activation of the Riyadh Metro by the Royal Commission for Riyadh City, where JLL is proud to be managing the leasing process for 733 retail units, further contributing to the city’s dynamic growth and development.
What role are logistics and data centre developments playing in transforming commercial real estate across the wider MENA region?
Logistics and data centres are rapidly evolving from “alternative” assets to essential infrastructure components in modern commercial developments. This transformation is particularly evident in Dubai’s logistics sector, where 25.26 million sq m of supply boasts an impressive 94% occupancy rate. Grade A facilities in strategic locations are commanding premium rents ranging from AED48 to AED55 per sq ft [AED517 to AED592 per sq m], underscoring the sector’s robust demand.
Data centres, previously categorised as alternative assets, are now integral to best-in-class developments. This shift is driven by the accelerating digital transformation and widespread cloud adoption across MENA markets. The convergence of logistics and technology infrastructure has given rise to “smart logistics” facilities, which seamlessly integrate traditional distribution with digital commerce functions.
In the data centre segment, demand has surged for Hyperscale, single-tenant large lease data centres, although current availability for sale remains limited. Concurrently, incoming operators are exhibiting strong interest in powered land. Major international operators are actively seeking partnerships with local data centre platforms to establish and expand their regional presence.
This evolution is emblematic of broader regional economic diversification efforts. Logistics hubs are playing a crucial role in facilitating trade, while data centres are catalysing the transition towards a knowledge-based economy across Gulf states. This dual development is positioning the region at the forefront of technological advancement and economic innovation.
How are investors and lenders approaching commercial real-estate financing across the Gulf amid higher construction costs and tighter credit conditions?
Construction cost inflation represents a persistent challenge, driven by the scale of regional project pipelines and supply chain disruptions. UAE infrastructure projects alone command $292.2 billion in cash flows through 2030, while real estate projects are projected at $469.3 billion over the same period, creating intense demand for construction resources and financing.
Investors are responding through increased selectivity, focusing on assets with strong pre-leasing commitments and established tenant covenants or off-plan sales. The “institutionalisation” of key Gulf markets is creating more structured financing approaches, though asset quality remains variable in the near term.
Lenders are emphasising covenant strength and cash flow stability over asset appreciation, reflecting the reality that while rental growth is robust, construction costs are eroding development margins.
What is your outlook for the next phase of the Gulf commercial property cycle – which cities or sectors are best positioned to outperform between now and 2027?
Dubai’s office and mixed-use sectors are projected to maintain their strong performance through 2027, driven by persistent structural supply constraints and robust economic diversification initiatives. Although the city anticipates 2.8 million sq ft [around 260,000 sq m] of new office supply in 2026-2027, this addition is unlikely to significantly alter the current supply-demand dynamics.
Abu Dhabi faces an even more acute supply shortage, with no substantial Grade A office space expected until early 2026. This scarcity is anticipated to accelerate rental growth in the capital.
Riyadh is forecasted to sustain its strong demand for Grade A office space, further cementing its position in the regional commercial real estate landscape.
The ongoing construction of the highly anticipated Wynn Resort in Ras Al Khaimah has catalysed exceptional investment growth in the hospitality and residential sectors, encompassing off-plan sales, land deals, and completed stock. The resort and gaming development is expected to have a profound impact on Ras Al Khaimah’s real estate sector across all asset classes.
Mixed-use developments across the UAE emirates and Saudi Arabia continue to benefit from diversified demand drivers, positioning them to attract the majority of real estate investment flows through 2030.
In conclusion, key growth markets in the UAE and Saudi Arabia are projected to experience increased demand for industrial, data centre, and logistics assets in the coming years, reflecting the evolving requirements of businesses in the region.
Do you expect the Gulf’s construction pipeline to expand significantly to meet current demand, or will developers remain cautious given cost pressures and limited land availability?
The Gulf’s construction pipeline is set for significant expansion, with UAE real estate projects exhibiting exceptional growth momentum – escalating from $46.5 billion in 2025 to an impressive $157.1 billion by 2027. This remarkable tripling of project value within a mere two-year span underscores robust developer confidence and abundant capital availability.
Although cost pressures persist, they are catalysing innovation rather than inducing stagnation. Developers are adeptly pivoting towards mixed-use formats, which not only optimise land efficiency but also generate diversified revenue streams. This strategic shift reflects a sophisticated market adaptation, demonstrating resilience and foresight in the face of challenges.
The ongoing infrastructure boom is particularly promising, with a substantial $292.2 billion earmarked for UAE infrastructure projects through 2030. This investment is poised to create a powerful multiplier effect, stimulating private sector development. The significant public investment in connectivity and utilities is expanding developable land opportunities while simultaneously mitigating project risk profiles, fostering a more favourable environment for sustained growth and investment.
