Renting and leasing commercial properties in Dubai can be challenging, especially if you are an entrepreneur. However, with the right approach and guidance, you can find an ideal location for your business without any hassle.
This article will provide a detailed guide on renting and leasing commercial properties in Dubai. We will discuss what needs to be done before and after the process with valuable tips to streamline everything.
- Things to Know Before Renting and Leasing Commercial Properties in Dubai
- Things to do After Renting a Commercial Property in Dubai
- Rental Payments for a Commercial Property in Dubai
- FAQs
Things to Know Before Renting and Leasing Commercial Properties in Dubai
We have divided the guide into three essential parts: the pre-renting process, the post-renting phase and the renting payment procedure. Let’s begin with the first phase.
To rent a commercial property, you must know the following factors:
Eligibility
Before leasing your desired commercial property, you must know that all businesses in Dubai require a valid trade licence. Depending on your licence type, several types of trade licences in Dubai can narrow your location search.
You must obtain your trade licence from where you plan to set up your business. The Dubai Economic Department (DED) is responsible for issuing all trade licences in the metropolis.
For example, suppose you are willing to rent a commercial space in the Dubai free zone. In that case, you must obtain your trade licence from the authorities in that area.
Choosing the Right Location for Your Business
Depending on your trade licence type, you must do research to find the best rental property for your business. Different licences are available for various kinds of companies.
For instance, if you have a TECOM-Free Zone licence, your rental space should be from the same area. Consider the following three questions before choosing the right business location:
- Is the location suitable for your business?
- Can your target customers easily reach this area, especially if you have a showroom?
- Is there enough parking space for all your employees?
Gathering all the Necessary Documents
The rules and the document requirements vary based on the location where you have rented a business property. Hence, gathering the right documents, permits, employee visas and RERA forms is necessary to streamline the renting process.
The following documents are required to approve your rental contract for a commercial property:
- Essential permits to utilise the premises
- Compliance of the licence with the current location plan
- Commercial property status
- Emirates ID or Passport copies
- Business ownership proof (Title deed, if you are the owner)
- Proof of company registration
- An electricity bill for the property
- A water bill for the property.
- Your passport or Emirates ID
- A copy of your trade licence
- A No Objection Certificate (NOC) from your sponsor (if you are a foreign national)
You must hire an experienced real estate agent to handle all the legal aspects of the renting and leasing process. These professionals understand property laws and regulations well and can streamline tasks efficiently.
Ejari Registration
Ejari regulates and registers all tenancy contracts in Dubai, whether commercial or not. Ensure you have mentioned all the terms and conditions for your business in the Ejari contract.
You can look at our guide on registering your tenancy contract with Ejari in Dubai for a better understanding.
Determining your Office Type for Employee Visas
In the UAE, companies can provide visas to foreign employees, but the type and size of the office affect this. For example:
- Flexi desk: up to three visas
- Serviced office: four or five visas, depending on size
- Physical office: one visa for every 29 sq. ft.
Set your Business Budget
Your business budget is one of the most important factors to consider when renting a commercial property in Dubai. Ensure that you plan your budget in a way that it covers all the hidden costs of renting in Dubai.
You must arrange the following payables before leasing a commercial property in Dubai:
- Real estate agency fees: 7-10% of the first annual rent
- Security deposit: 5% of the yearly rent of unfurnished spaces and 10% for the furnished spaces.
- DEWA account activation charges: Connection Fee:
- AED 100 for small metres.
- AED 300 for large metres.
- AED 10 (Registration fee).
- AED 10 (Knowledge Fee).
- AED 10 (Innovation fee).
- Dubai Municipality fees: 5% of the annual rent, added to the DEWA bill.
- Ejari registration and renewal fees:
- AED 100.
- AED 10 (Knowledge fee).
- AED 10 (Innovation fee).
You can read this guide on the additional costs of renting in Dubai for more information.
Types of Lease Agreements in Dubai
You must know the type of your lease agreement before renting a commercial space in Dubai. Typically, there are four types of rental and lease agreements:
Gross Lease
Companies rent a commercial property with a pre-decided monthly rent agreement. The landlord covers additional expenses like taxes, insurance, and maintenance.
Land Lease
The tenant company pays to lease the land and can construct a building for business operations. After the lease ends, the landlord regains possession of both the land and the building.
Triple Net Lease
This lease benefits landlords the most. The commercial tenant is responsible for the loan payment, insurance, taxes, and maintenance costs.
Modified Net Lease
This lease offers shared benefits to commercial tenants and property owners, with equally divided expenses, making it a common choice.
Things to do After Renting a Commercial Property in Dubai
Once you find a suitable property for your business, here’s what you need to do:
Make the Necessary Arrangements
Since you’ve found the perfect commercial property to invest in, consider these crucial factors:
- Get water and electricity connections from DEWA.
- Choose an insurance company to cover business-related damages.
- Hire an interior decorator to set up the space.
You can find many interior design companies or individual firms in Dubai.
Whether renting or purchasing a commercial property, interior designing and maintenance are recommended to keep the business space appealing. Ensure you budget for these factors when planning for commercial leasing.
However, you must remember that a rental commercial space cannot be changed without the landlord’s permission. If you choose to renovate the interiors of your new workplace, you must add this clause to the rental agreement. Once done, an NOC is required from:
- The landlord of the commercial property
- The building developer/manager
- Dubai Municipality or Free Zone Authority
Sub-letting Dubai Commercial Property
Sub-letting a property means renting out a property you currently lease to another tenant. Essentially, as the original tenant, you become the sub-tenant’s landlord. The sub-tenant pays rent to you, and you continue to pay rent to the property owner.
You can sublet commercial property in Dubai, but you need written approval from the landlord. To prevent confusion or disputes, ensure a subletting clause is included in the lease contract.
Early Termination of a Commercial Rental Lease in Dubai
A commercial property lease in Dubai typically lasts for one year. If the tenant and landlord don’t agree to end or change the contract after one year, it automatically renews.
If you decide to end the lease early, you may face penalties. The landlord can ask for compensation for losses due to the early termination, usually around two months’ rent. If there’s a significant dispute, both parties can take their case to Dubai’s Rent Dispute Settlement Centre.
Rental Payments for a Commercial Property in Dubai
The payment method for renting and leasing commercial properties in Dubai is primarily cheques. Regardless of the type of business property, you might not find any landlord accepting payments other than cheques. You can issue these cheques from your company’s or the investor’s accounts.
However, according to your agreement with the landlord, you can pay the rental charges in one or multiple cheques. A security deposit of 5% of the annual rent is applicable.
FAQs
To rent a commercial property for your business in Dubai, you must:
– Check your eligibility
– Gather all the necessary documents
– Register with Ejari
– Choose your ideal location
– Plan Your budget to pay the additional costs
– Obtain NOC for interior changes
– Prepare a contingency plan for mishaps
Commercial properties typically offer higher rental returns, ranging from 6% to 12%, providing significant cash flow for investors. Additionally, having multiple tenants reduces the risk of vacancy.
The best commercial lease for a tenant often depends on their specific needs. A Modified Net Lease is popular as it involves cost-sharing between the tenant and landlord.
Tenancy length depends on the local market, but the shortest commercial lease is typically available for less than 3 years. The long-term one typically lasts for more than 10 years.
This guide will make it much easier for you to understand leasing in Dubai. With its tax-friendly system and favourable trade laws, Dubai is an ideal destination for starting any business.
Check out these commercial rental properties in Dubai to make the best choice for your new business.
