Dubai has become one of the most popular cities for business and living. Many international companies are considering setting up offices in the Emirates. The reasons driving this demand include an excellent business setting, a strong economy, lower government fees, a business-friendly environment, a strategic location, appealing visa programs, and more. Finding a suitable space to establish and conduct your business operations is vital to your undertaking. Establishing a business in this metropolis presents several challenges, including securing commercial space in Dubai. This blog will discuss the methods, criteria, and other important factors for commercial property leasing in Dubai.
Eligibility to Lease Commercial Property in Dubai
The eligibility criteria are essential to ensure a smooth leasing process. Here are the requirements and steps involved in leasing commercial property in Dubai.
1. Business Registration: Businesses wishing to lease commercial property in Dubai must have a valid trade license. The Department of Economic Development (DED) or the relevant free zone authority issues this license based on the business’s location and activities. Additionally, the company must register as either a mainland entity, a free zone entity, or an offshore entity.
Steps:
- Choose Business Activity: Select the business activities you intend to conduct.
- Select Legal Form: Decide on the legal structure of your business (e.g., LLC, branch, sole proprietorship).
- Trade Name Registration: Register your business’s trade name with DED.
- Apply for Initial Approval: Obtain initial approval from DED or the relevant free zone authority.
- Prepare Documents: Collect required documents such as passport copies, shareholder details, and business plans.
- Lease Agreement: Submit a draft of the lease agreement if required by the licensing authority.
2. Ejari Registration: The Real Estate Regulatory Agency (RERA) developed the Ejari system, which requires the registration of all lease agreements in Dubai. Both parties are assured of transparency and legal protection.
Steps:
- Sign Lease Agreement: Sign the lease agreement with the landlord.
- Register with Ejari: Submit the lease agreement and other necessary documents to Ejari for registration.
- Receive Ejari Certificate: Once the registration is complete, receive the Ejari certificate, which is mandatory for utility connections and other services.
3. Financial Documentation: The tenant must demonstrate financial stability and the ability to meet all lease obligations. It often includes providing financial statements, bank guarantees, and other relevant documents.
Steps:
- Prepare Financial Statements: Gather financial statements and documents showing your business’s economic health.
- Bank Guarantees: Provide bank guarantees or post-dated cheques as the landlord requires.
4. Zoning Compliance: Verify the zoning compliance of the chosen property for the intended business activity. Different areas in Dubai have specific zoning regulations that dictate the types of businesses that can operate there.
Steps:
- Check Zoning Regulations: Verify the zoning regulations for your preferred location.
- Ensure Compliance: Verify that the chosen zone permits your business activity.
5. Adherence to Local Laws: Businesses must comply with all local laws and regulations, including labor, immigration, and health and safety.
Steps:
- Understand Local Laws: Understand Dubai’s legal and regulatory requirements.
- Compliance: Ensure all business operations comply with these laws to avoid legal issues.
6. Insurance Coverage: Tenants may be required to obtain various types of insurance, such as property insurance, liability insurance, and worker’s compensation insurance, depending on the nature of their business.
Steps:
- Determine Required Insurance: Identify the types of insurance needed for your business.
- Obtain Insurance Policies: Purchase the necessary insurance policies to protect your business and comply with lease requirements.
Types of Commercial Leases in Dubai with Duration
Dubai’s commercial real estate market offers various lease types to cater to the diverse needs of businesses. The duration of these leases can vary significantly depending on the type of lease and the specific terms negotiated between the tenant and landlord. Here’s a detailed overview of the primary types of commercial leases available in Dubai, along with their typical durations:
1. Gross Lease
The landlord pays all operational costs, including maintenance, utilities, insurance, and property taxes. The tenant pays a single rent amount.
Typical Duration:
- Short to Medium-Term: Generally range from 1 to 5 years.
- Renewal Options: Often includes options to renew, subject to new terms.
2. Net Lease
The tenant pays the standard rent plus some of the property’s operational costs. Lease variations include single-net, double-net, and triple-net.
Types and Durations:
- Single Net Lease (N Lease): 1 to 5 years.
- Double Net Lease (NN Lease): 3 to 10 years.
- Triple Net Lease (NNN Lease): 5 to 15 years, often with longer terms for high-value properties.
3. Modified Net Lease
The tenant pays the base rent and a portion of the property’s operating expenses, usually predetermined in the lease agreement.
Typical Duration:
- Medium-Term: Typically ranges from 3 to 7 years.
- Renewal Options: Often includes renewal options with renegotiated terms.
4. Land Lease
The tenant leases the land from the landowner and constructs a building. Ownership of the building usually reverts to the landlord at the end of the lease term.
Typical Duration:
- Long-Term: Commonly ranges from 20 to 99 years.
- Renewal Options: Often includes long-term renewal options or extensions.
How to Find the Proper Location
Finding the ideal location for leasing commercial property in Dubai is crucial.
- Identify your business needs and target market.
- Choose high-traffic areas for retail or business hubs, such as Downtown Dubai for corporate offices.
- Ensure the location is accessible for employees and clients, and check for nearby amenities such as restaurants and public transport.
- Research future developments that might affect the area.
Consulting a knowledgeable real estate agent in Dubai can provide valuable insights and help you select a location that supports your business goals.
Office Type and Employee Visas
The number of employment visas a business can sponsor depends on their leasing commercial space. Therefore, before browsing through commercial properties for rent in Dubai, you must list the number of employees you plan to sponsor. The visa allowances based on office size are as follows:
- Flexi-desk (Shared Offices): Can sponsor up to 3 employment visas.
- Serviced Offices: Can sponsor up to 5 employment visas.
- Fully Leased Physical Offices: The number of visas varies depending on office size. You can typically apply for one visa for every 9 square meters of office space.
Do’s and Don’ts After Renting a Commercial Property
Securing a commercial property is an exciting milestone for any business. However, the journey doesn’t end there. Here are some essential do’s and don’ts to ensure a smooth transition and successful tenancy:
Do’s
- Thorough Inspection: Before moving in, conduct a detailed inspection of the property, documenting any existing damages or defects.
- Understand the Lease Agreement: Familiarize yourself with all terms and conditions of the lease, including rent payment schedules, maintenance responsibilities, and renewal options.
- Obtain Necessary Permits and Licenses: Ensure your business complies with all local regulations and permits.
- Build a Good Relationship with the Landlord: Maintain open communication and address issues promptly.
- Regular Maintenance: Perform routine maintenance to prevent more extensive problems and maintain the property’s condition.
- Comply with Building Regulations: Adhere to fire safety, health, and other building regulations.
- Consider Business Insurance: Protect your assets and business operations with comprehensive insurance coverage.
Don’ts
- Ignore Lease Terms: Avoid breaching the lease agreement, which can lead to legal disputes and penalties.
- Make Unauthorized Modifications: Avoid altering the property’s structure or layout without written permission from the landlord.
- Delay Utility Transfers: Ensure utilities are transferred to your name on time to avoid interruptions.
- Neglect Property Maintenance: Avoid neglecting repairs or maintenance issues, which can escalate problems.
- Disregard Local Regulations: Operating without necessary permits or licenses can lead to legal consequences.
- Overlook Security Measures: Neglecting security can risk your business and assets.
Expert Guidance, Seamless Leasing – Trust Navani Properties!
Navani Properties can be your trusted partner in leasing commercial property in Dubai, offering comprehensive services that streamline the leasing process. With extensive local real estate market knowledge, we provide expert guidance in selecting the ideal location that meets your business needs and complies with visa regulations. With our expertise, you can acquire a commercial space that facilitates your company’s expansion and improves operational effectiveness.