Dubai has emerged as one of the most popular cities for business and living. The city is brimming with well-equipped state-of-the-art offices that are available for rent, lease and for sale.
Most companies will initially rent or lease their commercial spaces before later moving to more permanent offices that they purchase for their business.
All firms seeking to buy, lease or rent commercial property in Dubai must have a trade license issued by the Dubai Economic Department (DED) or a registered free zone such as the Dubai Multi Commodities Centre (DMCC) or Dubai Silicon Oasis (DSO).
The terms rent and lease are used interchangeably, but they are actually distinct practices and carry different responsibilities. For a rental contract, the term is typically in weeks, or months, even up to a year and upon expiration of the timeframe the contract automatically renews unless rightfully terminated. However, for a lease, the time period is typically longer with the minimum period being a few years and can be extended even up to 99 years. Additionally, when a lease agreement reaches its maturation, it will need to be renewed with a new agreement.
When it comes to leasing commercial property in Dubai, there are four common types of agreements:
- Gross Lease
A gross lease is a basic lease in which the tenant pays a pre-decided rent every month and the landlord is responsible for expenses such as tax, insurance and maintenance expenses.
- Land Lease
In this type of contract, only a stretch of land is leased out to the tenant by the landlord. The tenant is allowed to construct a building for his business purpose. At the end of the tenure, the landlord gets his land back along with the constructed building.
- Triple-Net Lease
The triple net lease is the least popular one of all the lease types as it is expensive for tenants but is very favourable for the landlord. The tenant has to pay rent as well as take care of expenses arising out of paying taxes, getting insurance and even maintenance work
- Modified Net Lease
This kind of lease is the most preferred one of all the lease settings as it is equally beneficial for landlords as well as tenants. All the expenses are shared by both the parties.
Before renting or leasing Dubai’s commercial properties, determine whether you want to operate onshore or within a free zone. If a firm wants to operate a business onshore in Dubai then the company has to share ownership with a local partner. Alternatively, firms will retain 100 percent ownership if the owners are not UAE nationals and operating from any of Dubai’s free zones.
Subletting is allowed for commercial property if the tenant has written approval from the landlord.
Dubai’s commercial property market has grown by leaps and bounds. The city is a favourable area for business as it is well-connected and easily accessible to other major economic and trade hubs from Asia and Africa to Europe and the Americas and earnings in the UAE are still tax-free.