Thinking of investing in commercial real estate? Here’s everything you need to know!

Thinking of investing in commercial real estate? Here’s everything you need to know!

Thursday 31 August 2023Wed 16 Feb
Thinking of investing in commercial real estate? Here’s everything you need to know!

Dubai, the investor's jewel, has rapidly transformed into a global economic hub and a popular destination for business and tourism. Its strategic location, world-class infrastructure, and investor-friendly policies make it an attractive market for purchasing commercial real estate.

Whether you are an entrepreneur looking to establish a business or an investor seeking lucrative opportunities, did you know Dubai’s commercial property market olds some incredible returns on investment and we’re here to walk you through the essential steps and considerations for buying commercial real estate in Dubai.

Investing in commercial real estate can be highly profitable as well as that as there is such a high demand and lack of supply at the moment. That ROI can range from 7% up to 12%, usually less cheques than in residential, better quality of tenants to name a few of the advantages. It is a good long term investment as there are more companies coming into Dubai starting the ripple effect of population growth.

Getting started: What is commercial real estate?

Commercial property is real estate that is used for business activities. This includes buildings that house businesses, office spaces, retail units, warehouses, but can also be plots used to generate a profit, as well as large residential rental properties.

How can you get started with your investment/rental in commercial real estate?

Before diving into the market, conducting thorough research is crucial. We suggest you familiarise yourself with the various commercial districts, such as Downtown Dubai, Business Bay, DIFC,Dubai Marina, and JLT to name a few. It’s also essential to familiarise yourself with the communities you can invest in for commercial real estate.

Each area caters to different industries and markets, so it's essential to align your business needs with the location that suits your objectives, and to understand the different type of commercial licences in Dubai. Furthermore, study up on how can you obtain a commercial licence in Dubai, so you will be one step ahead during the process.

How can you find the right commercial property?

Navigating the Dubai real estate market can be complex, especially for first-time buyers. We recommend engaging a reputable real estate agent who has in-depth knowledge of the commercial property market.

A skilled agent will provide valuable insights, guide you through the legal processes and requirements to purchasing a commercial unit in Dubai, and ensure you make well-informed decisions. This is crucial as it will help you understand what areas you can purchase commercial property in Dubai, and what are the different types of zones for commercial property purchase in Dubai?

Setting a budget

Determine your budget and financial capabilities before embarking on your property search. Commercial real estate prices in Dubai vary significantly based on location, size, and amenities. This will help you figure out whether you want to buy or rent and help you understand which is right for you.

Factor in not just the purchase cost but also ongoing expenses like maintenance, service charges, and utilities.

Understanding the legal regulations

Understanding the legal framework is vital when buying commercial real estate in Dubai.

Whether you’re a resident or foreign investor, it's important to study up on how foreign investors can purchase commercial units in Dubai and the areas where you can acquire properties in. For some foreign investors who prefer to be under certain legislation there are designated areas called freehold zones, which grant ownership rights to non-UAE nationals.

However, outside these zones, you might need to consider leasehold options or form a partnership with a local entity.

How to choose the right property type?

Dubai offers a diverse range of commercial properties, such as office spaces, retail outlets, warehouses, and industrial units. Your choice should align with your business requirements and long-term goals.

For instance, if you plan to cater to tourists, investing in a retail space in a bustling area might be ideal. The first thing to know is that are commercial properties a better investment for you and which commercial property is right for you?

Assess amenities and infrastructure

The success of your commercial unit, and its capital appreciation often depends on the surrounding infrastructure and amenities.

Having a checklist to viewings on hand is better as it helps you consider factors such as proximity to transportation hubs, availability of parking, nearby facilities, and access to essential services.

Check Title Deeds and Ownership

Ensure that the property you're interested in has clear title deeds and a legitimate ownership history. Working with the sales progression team can help you scrutinise the property documents and avoid potential disputes or complications.

This can help when you plan on selling your property in the near future too, as no property transfer or purchase can go through without a title deed present.

Negotiations, due diligence and financing options

Once you’ve settled on the property, it's time to consider whether you would be opting for financing options, in such cases we recommend brushing up on mortgages, and how you can obtain one.

Next step is to negotiate the price and terms of the deal with the seller. Once an agreement is reached, conduct a thorough due diligence process, verification of documents, and financial assessments.

Then you’re set to lock down your property.

Finalise the purchase

Before completing the purchase, engage the services of a sales progression team to handle the legal formalities and transfer of ownership. Pay the necessary fees and taxes required by the Dubai Land Department to ensure a smooth transaction.

Once that’s done, you’re all set to get your hands on your commercial unit. But by any chance if you feel like you want to sell off the unit or purchase another unit, it's important to consider that you might have to shift your licence in order to purchase elsewhere.

What’s new in the market?

If you’ve now been set on investing in Dubai’s commercial property market, here is a gem you might want to consider checking out - Dubai Commercity!

Tucked away in the city’s Umm Ramool community, this space is a haven for commercial properties, businesses and investors alike.

Keen to check it out? Get in touch with our Senior Commercial Property Consultant; Jade Simpson for more information.

If you found this guide helpful or would like to know more about commercial real estate, get in touch with our team of experts!

Or take a look at our Taking Care of Business podcast on how commercial real estate is Dubai’s best kept secret.

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