In Dubai, a conducive business atmosphere undoubtedly encompasses commercial real estate as an essential instrument for businesses to carry out their operations. In recent times, the real estate market in Dubai has experienced unprecedented growth, with the demand for residential and commercial spaces surpassing the available supply.
Table of Contents
- Why start a real estate business in Dubai?
- Buying vs renting – what is better
- What kind of properties can a company own in the UAE?
- Requirements to business
- To carry out commercial activities you must obtain a license.
- Types of commercial properties
- Best areas to buy a commercial property in Dubai
- How to buy commercial property?
Why start a real estate business in Dubai?
Investment in real estate in Dubai is a popular trend in recent years and has a number of advantages:
1. High returns: Commercial properties in Dubai can generate high returns due to the stable economic growth and high rental demand.
2. Minimum taxes. Property in Dubai is not subject to annual property tax and is not subject to income tax. Capital gains and rental income are also tax-free.
3. Remote transaction. You can buy real estate in Dubai remotely. To do this, you need to issue a power of attorney at the UAE Embassy.
4. Affordable mortgage. The average rate fluctuates within 5% per annum.
5. Purchase with cryptocurrency. Owners of business in Dubai are accustomed to working with digital currency. For such transactions, a number of proven exchangers are used.
6. Obtaining resident status. An investment of $205,000 provides the investor and his family with a residence visa, which opens access to healthcare, education, and simplifies the process of obtaining a Schengen visa and citizenship of other countries.
Buying vs renting – what is better
The decision to buy or rent commercial property in Dubai depends on various factors such as budget, strategic goals, length of stay in the market and level of risk appetite.
If you are on a tight budget or want to avoid long-term financial obligations, then renting a commercial property in Dubai may be the best choice. Leases are typically more flexible and allow you to quickly adapt to changing business needs. There is also no need to worry about additional costs for repairs and maintenance of the property.
However, if you are planning a long-term strategy and have a sufficient budget, then buying commercial real estate may be a more profitable option. Owning your own property gives you more freedom to run your business and can be a long-term investment that can provide benefits in the future.
In any case, before making a decision, you need to carefully study the market, conduct a risk analysis and evaluate your business priorities. Consulting with experienced professionals in the field can help you make the right decision.
What kind of properties can a company own in the UAE?
In the UAE, including Dubai, there are several types of property ownership for foreign investors, and access to them depends on the specific location and type of property. Here are the main types of property that foreigners can own in the UAE:
Freehold: Non-Arab foreigners have the right to full ownership of real estate in certain Free Zones. In such zones, real estate is registered in the name of the investor and can be sold, rented, inherited or gifted.
Leasehold: This type of property allows foreigners to own a property on a leasehold basis for a long period, usually up to 99 years. At the end of the lease term, the property is returned to the owner (usually the developer), but often the tenant can extend the contract or sell the remaining lease period.
Joint Ownership: In some projects, foreign investors can purchase real estate on a joint ownership basis, where each investor’s share is determined in proportion to the size of his investment.
Property in Special Areas: In some special areas, such as Dubai Marina or Business Bay, foreigners have the right to freehold property in dubai.
National Tenancy (Usufruct): This type of ownership allows foreigners to rent the property for a longer period and even transfer the tenancy to others, but the ownership remains with the UAE nationals.
It is important to remember that the terms and conditions of property ownership may change depending on legislative changes and specific projects.
Requirements to business
Today in the UAE there are more than 50 free economic zones (free zones) and 3 offshore zones with their own governing bodies and legal regulation, with unique lists of company activities, as well as different levels of requirements for companies (for example, requirements for the type of office or for conducting an audit).
To carry out commercial activities you must obtain a license.
The next step is to select the type of activity of the company that will be reflected in its license. The activities of local companies are determined by the Dubai Department of Economy and Tourism. Any real estate transactions, such as sales or leases, must be properly completed and registered in accordance with local laws
A foreign owner of real estate in the UAE usually has the right to full ownership of the property in certain Free Zones. This means they can sell, rent, gift or inherit the property. In other cases, for example, with a long-term lease (leasehold), the foreign owner has the right to use the property for a certain period, usually up to 99 years.
If you want to take advantage of some of the benefits of the UAE real estate market without spending time on buying a property, you can invest in REITs.
Real estate investment trusts (REITs) provide business opportunities in Dubai for individuals to invest in the UAE’s property market. These firms focus on owning and overseeing a variety of commercial assets, such as office buildings, residential properties, shopping malls, and hotels. By acquiring shares in REITs, investors have the chance to earn dividends as per the agreement’s stipulations.
Types of commercial properties
You can find both fully furnished and unfurnished office space for rent and purchase in Dubai. Their cost varies depending on the area, the size of the room and the presence or absence of furniture.
In various city areas and residential neighborhoods, there is a high demand for shops. These properties can be purchased while under construction, brand-new, or as secondary (previously owned) units. Properties under construction tend to be the most cost-effective option, with prices significantly lower than finished ones.
Warehouses constitute another favored category of commercial real estate. Besides being ideal for goods storage, they can also accommodate light manufacturing operations. A considerable inventory of warehouse spaces is available for leasing or purchasing in Dubai.
Numerous businesses, both large and small, typically opt to lease or rent retail spaces for set periods of time. This approach allows them to avoid the expenditure associated with purchasing the entire property.
Such option for investing can be an appealing choice for investors, as the initial capital needed to begin in this industry is relatively low, and the rental cost is lower compared to other properties.
Commercial villas are suitable for placing an office, store, restaurant, private clinic or kindergarten, as well as for other purposes at the discretion of the entrepreneur. These properties offered at buy-dubai.ae/properties-for-sale are very convenient due to their layout.
Showrooms are an ideal option for displaying products. In free economic zones, most showrooms primarily target corporate clients seeking to forge stronger connections with their end customers.
Didn’t find a suitable option from the range of existing ones? In this case, you can buy a plot of land and build the desired facility on it yourself. In Dubai, investors have the choice between two plot types:
- Mixed-use land – appropriate for building residential properties.
- Industrial-use land – designated for constructing commercial structures.
A crucial aspect of Dubai’s prosperity strategy lies in the enhancement of production. The government actively encourages investors to contribute to this sector’s growth by offering them various fiscal, customs, and additional incentives.
Best areas to buy a commercial property in Dubai
The city has several promising areas for investment. The popularity of the area affects the tourist flow and comfort of living, which ultimately affects the price.
The most famous free zone in Dubai. A small tourist area along the coast, where there is a shopping center, restaurant complex, attraction, park and cable car. Real estate is expensive – influenced by tourist flow and proximity to the sea, but this also gives a high return on investment.
The very center of the city is just 1.5 km from the Burj Khalifa. Most of the buildings are occupied by office and commercial real estate, but there are also residential complexes in the area. Today, more than 18,000 companies are registered in Business Bay, the center is being actively developed, the city is planning the construction of mixed types of real estate suitable for any business ideas in Dubai, which is already a good help for investment projects.
This is where the Burj Khalifa is located. It is also the center of the city, built up with a huge number of estate. Also located here is The Dubai Mall shopping center, the Dubai Opera and a musical fountain, the jets of which hit the height of a 50-story building.
How to buy commercial property?
Commercial and residential real estate are purchased in the same way.
1. The same land department (DLD) and the same regulatory department (RERA) are responsible for the procedure. The differences begin only in matters of rent. Briefly about each:
2. Gross lease – monthly payment in an agreed amount. Insurance, tax and maintenance costs are the responsibility of the lessor.
Modified net lease – the agreement is similar to the previous one, but the associated costs are divided equally.
3. Land lease – an agreement to lease land for commercial construction. The nuance is that upon expiration of the lease period, the constructed property becomes the property of the lessor.
Dubai boasts a vast array of commercial real estate options. Based on your objectives, you can choose from various spaces to execute projects of any scale, from a small clothing shop to a comprehensive manufacturing operation.