- Costs of buying commercial property
- Ejari for commercial properties
- Dealing with VAT
- Best areas for commercial properties
- Co-working spaces
- About Nina and JNM Specialists
Dubai is a prominent commercial hub, attracting businesses from around the world. New schemes and laws were introduced in Dubai to create a favourable environment for business owners and entrepreneurs to set up a business in the city.
If you’re an entrepreneur looking to set up a business in Dubai and have questions regarding buying or renting commercial property in the emirate, you’ve come to the right place. Here’s our exclusive interview with the co-founder of JNM Specialists Real Estate Brokerage, Nina Moraes who is an expert in dealing with commercial property in Dubai.
She tells us all about the best commercial options for potential entrepreneurs coming to Dubai during Expo 2020 and also discusses the legalities involved when buying and renting commercial properties in Dubai.
Watch the video below to get answers to all the questions about commercial real estate in Dubai.
ALL ABOUT COMMERCIAL PROPERTIES IN DUBAI
BUYING COMMERCIAL PROPERTY IN DUBAI
Buying vs renting – what is better for expat entrepreneurs with an established business
Nina says expat entrepreneurs with an established business in Dubai should consider buying, especially if they plan to stay in the UAE for the next 10 years.
The current market offers favourable conditions for expat business owners to get back the capital invested in buying a commercial property in the next 10 years. It also helps to eliminate the cost of rent and creates opportunities to focus budgets on activities that can grow the business.
Cost for buying ready commercial property in Dubai
Here is the breakdown of the upfront costs business owners can expect when buying commercial properties in Dubai.
- The property value
- The transfer fees of 4% to the Dubai Land Department (DLD)
- The 5% Value Added Tax (VAT)
- The trustee registration fees which is AED 4k + the 5% VAT, which comes up to AED 4,200
- The brokerage fees to the real estate agency
ROI for commercial properties in Dubai
The residential and commercial real estate market in Dubai offers investors a competitive return on investment. However, Nina believes that commercial property in Dubai gives better ROI for investors.
The better ROIs usually result from the fact that commercial tenants are likely to remain at the same address for a longer period of time. Shifting commercial units normally have a higher cost, because the area needs to be customised and branded. The logistics involved are also difficult to handle and have a higher cost.
Owning commercial properties in Dubai
As per the property law in the UAE, freehold commercial property in Dubai must be owned under the company’s name. Currently, offshore companies registered under Jebel Ali Freezone Authority (JAFZA) or Dubai Multi Commodities Center (DMCC) can legally own freehold properties in Dubai. Similarly, businesses that are incorporated in Dubai’s free zones are also allowed to own commercial properties in that respective free zone.
Nina explains that placing the property under the company’s name has many benefits. This includes safeguarding your investment, privacy, security and 100% foreign ownership.
RENTING COMMERCIAL PROPERTY IN DUBAI
Renting commercial properties in Dubai comes with its own legalities and costs. Nina mentions that when renting commercial property, tenants must register the tenancy contract with Ejari – a government-run program that regulates tenancy contracts in Dubai.
GETTING EJARI FOR COMMERCIAL PROPERTIES
In the case of commercial properties, the tenant is required to present an authorisation letter from their company and also have the tenancy contact stamped. Ejari can be registered for a fee of AED 170 (inclusive of VAT), which is usually paid for by the tenant. Check out our guide on how to register Ejari online for more information.
DEALING WITH VAT FOR COMMERCIAL PROPERTY IN DUBAI
When dealing with VAT for commercial property in Dubai, Nina explains that tenants have to pay VAT on rent only if the landlord is registered and has a valid Tax Registration Number (TRN). In this case, the landlord must provide an invoice to the tenant in order to get their fees.
The process is different for buyers looking at commercial properties for sale in Dubai. Buyers of commercial property in Dubai will have to pay VAT at 5% of net property value, on the transfer date.
Nina elaborated further saying that VAT charged on rent and sale price of any commercial property in Dubai, can be recovered by the business once the company is registered with the authorities and has a TRN.
BEST AREAS FOR COMMERCIAL PROPERTIES IN DUBAI
Business owners and entrepreneurs have the option to start a company in Dubai in either the mainland or a free zone. The difference between the two is the ownership rules.
In a free zone, foreign nationals have 100% ownership of the business, but can only conduct business and trade with companies outside the UAE. As for the mainland areas of Dubai, foreign nationals were previously required to have a UAE national to act as sponsor, owning a 51% share of the business. However, this stipulation was changed after the introduction of the 100% foreign ownership law in 2018.
While both areas offer 100% ownership, Dubai’s mainland areas restrict foreign ownership to a select category of business activities. According to Nina, this is why 95% of new companies in Dubai consider opening a business in a free zone.
She mentions that out of all the free zones in Dubai, DMCC located in the JLT area is a great choice for commercial properties like office spaces, shops and commercial floors. It offers the 0% personal and corporate income tax, 100% business ownership and has an online portal with all the relevant services to manage your business.
She added that since JLT is a combination of a free zone and a residential area, it offers the opportunity to live and work in the same community. It also enjoys a strategic location, close to other business hubs such as Dubai Media City and Dubai Internet City.
CO-WORKING SPACES IN DUBAI
When it comes to commercial properties in Dubai, Nina says that co-working spaces are actually the best option for entrepreneurs coming to Dubai during Expo 2020. In fact, recently, they have been receiving a lot of enquiries for co-working spaces from young professionals.
Nina explained that co-working schemes require minimal capital and provide a lot of flexibility for entrepreneurs to grow their business. She says it’s also a fast-track mode to set up a company in Dubai and get a residency visa.
If you’re looking for the best co-working spaces, AstroLabs, Servcorp and Nook are Nina’s top recommendations for co-working spaces in Dubai. For those looking at business centres, One Business Center, RSO and DMCC I5 Premium are ideal.
And that brings an end to MyBayut’s Expert Advice segment for the month! These tips from Nina should help you get an idea on how to choose the right commercial space for you. If you’re specifically looking for office spaces but don’t know which areas to consider, here is a list of the top five areas to rent offices in Dubai.
ABOUT NINA MORAES
As the co-founder of JNM Specialists, Nina has been a major part of the growth of JNM Specialists. She has over 15 years of experience in the field and is an expert in the commercial real estate sector in Dubai. She brings a fresh and dynamic perspective to the property market and is known for her go-getter attitude. If you’re looking for retail spaces, offices, showrooms or shops in Dubai, she’s the go-to person.
ABOUT JNM Specialists Real Estate Brokerage
JNM Specialists Real Estate Brokerage is a leading real estate agency in Dubai that offers clients the best solutions for commercial real estate in the region. Some of the services they offer include sourcing properties as per the clients’ requirements as well as managing the formalities involved in renting or buying commercial properties in Dubai.
Their focus on quality and a vast portfolio of properties quickly positioned them as a market leader in the industry. If you want to browse through the available properties they have, check out JNM Specialists Real Estate Brokerage on Bayut.