Commercial leasing guidelines for tenants in Dubai

We can’t deny the fact that we are all smitten with sumptuous buildings that Dubai is dotted with. And when it comes to rent an office space for your business you would want one that not only stands high in beauty but also comfort. Because the way a workplace is designed affects plenty of things, including the vibe and overall aesthetic. It won’t be exaggeration if I say it plays pivotal role in the productivity, satisfaction, and engagement of your employees.

Office SWEET Office!

People (including you and me!) often say “Home sweet home.” Do you know why? Because there’s no place like home. And your workplace is no less than your second home. Then how can it be any less sweet than one’s home! You design it your way, dress its interior up to the nines using ultra-modern furniture, rejig it time to time to make it more casual, personalised and comfortable and most importantly you spend the majority of your time there when you are awake. Just like your home speaks about your personality, your office also tells a lot of you and your business. Therefore, it absolutely makes sense you rent or lease an office that check all the boxes.

Commercial Leasing: Importance

Dubai is home to tons of magnificent offices complete with scenic views, awe-inspiring interiors and state-of-the-art amenities. You are spoilt for choices particularly if budget is not a constraint for you. Choosing the right commercial space in a suitable location is crucial to set up and run your business successfully.

As a business person you know what kind of office can fulfil your purpose but as a tenant you might know what are the most important things to know when leasing a commercial property in the business and financial hub of the region. Your office is the address where your business resides and waits for its clients, therefore it has to be situated on the right site first off. Not just location, you as a tenant have to be very careful about a few other things to boot that play equally important role while choosing your office such as terms & conditions of business deal and rules & regulations of the area your office is located in. Here’s your primer on guidelines in connection with commercial lease in Dubai, UAE along with some tips that will help you make a well-informed decision if you are a first-time business renter.

Eligibility criteria to lease a commercial property in Dubai

To be able to lease commercial office space entrepreneurs must hold a valid trade licence issued by the Dubai Economic Department (DED) or a Dubai Government Free-zone. With relevant licensures you are allowed to establish your business anywhere in mainland or in free zone area depending on the jurisdiction your business comes under.

Timeframe for leasing a commercial property

Commercial leasing takes time to complete. You might be asked to wait for 6-8 weeks in case it’s a ‘standard’ lease transaction from receiving the heads of terms from the property agents to actually signing. At a minimum, the lease agreement should clearly mention the property address, amount of rent and term of the lease with an effective start date. It should also include any additional costs that the tenant and landlord will be liable for. Despite the fact that there is no standardised procedure when it comes to legal costs, it is the tenants in Dubai who usually fork out for the lease document related costs. To make it legal, both the parties – the landlord and the tenant – have to sign the lease contract. Our advice: Do not forget to read the contract up to the hilt before writing rent cheques or putting your John Hancock on any of the pages.

Mandatory documents for commercial leasing in Dubai

Your office cannot moonlight as a warehouse and vice versa – the rules are as clear as day regarding the purpose of commercial properties in Dubai. It’s therefore paramount that you have all the essential documentation in place. This includes, but is not limited to:

  • Proof of business ownership
  • The status of the premises
  • Compliance of the premises with the existing plans
  • The mandatory permits to use the premises

Buckle up to gather a bunch of other documents also to get into a commercial tenancy contract in Dubai, UAE. The to-be landlord of yours may ask for below-mentioned documents apart from the above-listed documents before making a contract with you.

  • Bank references
  • Current credit reports/scores from all three reporting bureaus.
  • Previous/current landlord references (for an existing business moving to a new location)
  • Personal and corporate financial statement(s)
  • A copy of your business plan
  • Business bank statement(s)
  • Provisional approval from emirate’s licensing authority
  • Company manager’s passport whose name was mentioned on trade licence
  • Signing authority letter if the name is not mentioned on the trade licence

Give the contract a through read before finally signing it to make sure that all:

  • Contractual terms and conditions are duly mentioned in the contract to avoid any disputes later on
  • The big little modifications you are planning to do to the office such as installing cubicles, cameras, etc. are mentioned in the contract. Surprisingly, you can alter the interior of the property after obtaining Non-Objection Certificates (NOC) from the landlord, building manager, Dubai Municipality or relevant bodies if you have rented out property in the free-zone, Dubai Civil Defence and Emirates Health and Safety.
  • The details about your business are registered correctly, including your business’s nature, so there is no dispute later

Documents for electricity, cooling & water connections

This step is simple. You don’t have to grease your elbow to access the basic amenities! Just a valid trade licence and voilà! You can get water, electricity and cooling facilities from Dubai Electricity and Water Authority and start your business.

Time taken in installing necessary fit out

How long it will take to outfit the space as “YOUR” office obviously depends on the condition and size of your commercial unit. A typical office with the size – 1,000 square feet to 4,000 square feet may take anywhere between 6-8 months to be up and running with all the desired fit out.

Sub-letting of commercial space

Tenants can’t legally sublet their commercial property in Dubai until they have approval from landlords in black and white. You should clarify these petty things as well beforehand with the landlord to steer clear of any disruption in the plan later.

Rent payment for commercial properties in Dubai

Cheque is the most popular mode of payment in Dubai when it comes to property rents. Landlords in the emirate prefer taking rents through cheques issued by tenants’ personal or company bank account in UAE, that too upfront. Which means all cheques for the entire term has to be given to the landlord upon signing the lease contract. Just like the length of the commercial lease contracts (3-5 years), number of cheques you wish to pay your rent via is negotiable but usually don’t go beyond six cheques per annum. If tenant wants, they can pay the amount in one cheque every year as well. In addition to the rent and some percentage of amount as admin fee or maintenance charges cheques tenants also are asked to shell out 5% amount of the total rent amount as a security deposit which is refundable at the time of property vacation. Do not expect the refund to be in full as landlords are sure to deduct the amount in case, they find any damages to the property at the time of property handover.

Other fees and charges that commercial tenants in Dubai have to dish out

All commercial tenants in Dubai, UAE should be prepared to pay additional fees or charges while getting into a lease contract. These charges can include annual property maintenance and repair costs spent on shared areas, such as common stairwells, corridors, roofing and drains along with other service charges like handyman services. Tenants should note that this might also extend to building insurance, expenses required to furnish empty office space and fees to obtain approval from the government.

Early termination of commercial lease in Dubai

The commercial tenant any time exit the lease contract provided they are steeled to cough up a monetary penalty to the landlord for not completing the agreed term. Usually, the penalty to break any sort of lease contract in Dubai is a two-month rent. The penalty is seen as a compensation for the landlord for the losses they might incur due to the failure of not meeting the contract rental period. Be informed, you are not allowed to stay at the premises during this period for whatsoever reason. In the event of early commercial lease contract termination before completing the term it’s important you notify the landlord about your intention beforehand. You may negotiate on the amount of penalty demanded by your landlord and explain the circumstances, if your reason to back out of the deal sounds fair enough to the landlord and you are in luck you may get a good concession in the fee.

How Adam Global Dubai can help?

Ultimately, learning the process of renting a great full-fledged commercial space to accommodate your professional assets can lead to somewhere you won’t want to come back from – “heights of success”. Whether you are running a day care, a grocery store, a real estate business, a beauty salon or a digital marketing company, location of your business is one of the success ingredients that help you hit the ball out of the park. Take your business to the next level by engaging an experienced Dubai business setup consultant like Adam Global Dubai. Our qualified business advisors can alsohelp you find the office space that is sure to hit the right chord with you, your clients and your target audiences as well. Feel free to call us to know how we can help you in your business setup process.

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