The sub-700-ton niche is shifting toward XLUUVs

Are submarines under about 700 tons still being developed?

Yes, but many current projects at that scale are framed as extra-large uncrewed underwater vehicles rather than conventional crewed submarines.

Navies still show interest in submarines below roughly 700 tons, but much of the current work is described as extra-large uncrewed underwater vehicles. Contemporary projects therefore tend to place these hulls in the XLUUV category rather than present them as conventional small submarines. The programme language reflects a shift toward uncrewed designs at this scale. It does not prove that crewed boats below 700 tons have disappeared entirely.