Starting your own real estate business in Dubai without any doubts is a great idea. It’s a wonderful opportunity to work and live in one of the most beautiful and prosperous countries all over the world. At the moment Dubai is at the top-list of the most attractive regions for foreign investors. So it’s not a surprise that the local real estate market is growing rapidly.
Profitable real estate in Dubai is an investment that can bring money in two ways: by reselling or renting. Emirate developers are commissioning housing at a fantastic pace: for example, 37,000 properties were commissioned in 2022. For investors, this means that it will be easy to find real estate of any class and at any stage of construction. At the same time, the cost of housing is constantly increasing: according to the financial publication Bloomberg, until the end of 2023, housing will become more expensive by 3%, in the next – by another 2.5%.
The maximum profit from renting investment property in Dubai is up to 15% per annum. As a rule, renting apartments is more profitable than private houses. If the annual income from renting a villa does not exceed 5-7%, then in the case of apartments, the figures will be much more impressive – about 8-13%. An important role is played by the location of the object – the largest percentage is brought by buildings in new areas of the city, such as DubaiLand or Business Bay.
Let’s take a quick look at all the benefits of doing your own Real Estate Business exactly in Dubai. As the list is pretty much numerous, we’re going to name just a few main advantages.
Rapid grow of Real Estate Market
Real estate market of Dubai is one of the most prosperous and rapidly growing ones all over the world and it is still growing literally every day. That’s why it is always a good decision for a long-term perspective, not just the near future.
Locating in between not 2 but all 3 big continents (Europe, Asia, Europe) Dubai is taking advantage of geography and serves as a chain link in hundreds of global economic processes. And real estate companies in Dubai get every possibility to get involved in all of that global processes in between all 3 continents at the same time.
So far Dubai has made a great impact in the development of country infrastructure, as it has got one of the most developed chains of transport, communications and utility. Right now Dubai is a place of modern technologies, which are smartly involved in cities to make life of citizens more convenient and comfortable as a result. So it has got the same benefits for the real estate sphere.
Stability in economic sphere
Real estate sector is one of the main ones in the Dubai economic structure. According to statistics, real estate in Dubai is practically not subject to inflation, so investing in local new buildings is a good idea. This means that even in the most difficult times, your cash investments will not depreciate. The government pays a lot of attention to this particular sphere and gives investors all the guarantees and necessary protection and support for stable work of business in the field. As only you invest, you get almost a 100% guarantee that you not only would never lose your money, but would get profit in a very short period of time.
Easy way of performing your own business
Not just in real estate, but in general, the Dubai government really makes everything to make the life of business owners way easier. This includes policies and laws aimed at creating a supportive regulatory atmosphere and simplifying all the obligatory procedures as much as possible.
When buying real estate in the Emirates, all foreigners receive 100% protection from the state. Representatives of local authorities make sure that the acquired object is properly executed – ownership rights must be documented. The procedure is supervised by state lawyers.
Required types of license
If you’re about to create your own real estate company in Dubai, it is obligatory to get a number of permissions from local authorities.
This type of license is a crucial one to get if you’re going to launch any type of business, dealing with trading, no matter what you’re going to trade with: vegetables or houses. So this document is given by the Department of Economic Development.
Another government institution dealing with the real estate sphere is RERA – Real Estate Regulatory Agency. For any real estate agent in Dubai, a license from RERA is an obligatory document.
Real Estate Brokerage License
The next one is a permission from DLD – Dubai Land Department. It is an obligatory document for any real estate enterprise, without which it is impossible to run such a business in Dubai.
You need to obtain a commercial license in case you want any other person to buy or sell anything on your behalf.
That is the name of a special system, developed for ruling a real estate sphere. Any agreement that your sign as a landlord should be checked and certified by Ejari before it would be given any law power.
How much money is needed?
To launch a real estate company in the territory of Dubai, you’re to have a brokerage license. If you’re an LLC owner, such a permission would cost you something like 30,000 AED. This cost includes taking a careful examination of your business by RERA.
The final cost of opening a real estate brokerage in Dubai would depend on a concrete location of your office, types of your business activities and some other factors. Each case is pretty much special.
Concrete steps to launch real estate business in Dubai
First of all, the investor must choose the most comfortable strategy. In this case, we are talking about the types of lease agreements – short-term or long-term. The option with a long-term lease seems to be more profitable, because it provides a stable income for a long time without the need for a personal presence in the country. To start renting out an object, you will need a passport and a title deed. All details should be discussed in advance, for example, how payment will be made – in the form of a one-time payment or periodic installments (every 3-4 months).
It is short-term rentals that bring the maximum profit – apartments for several months can be rented more expensively. Keep in mind that in this case, the owner will have to obtain an annual license worth $600. Additional costs will be required for the services of the management company, which will monitor the order in the apartment before and after the tenants move in. Such companies take about 20% of the profits received for rent.
But to get things started, here’s our step-by-step guide to set up your business in the sphere of real estate in Dubai.
Step1: Choose a structure
The very first step for those who decided to start their business in Dubai is to choose a type of business structure that would be used. It is a very important aspect because making a right decision at this stage would give benefits in advance. And on the contrary: mistakes at this stage are crucial for your business project as a whole.
In general, among different types of business structures, there are only two, allowed to be used when we speak about brokerage business in Dubai:
- Sole proprietorship
- Limited Liability Company (LLC)
Also, according to local law regulation in the field, you can only establish a real-estate agency in any form if you’ve got a UAE citizenship. So for foreign investors the only thing left is to find a local sponsor or partner, who would officially be stated as a company director. Luckily it is not a problem to find a local partner, as Dubai businessmen are always ready to work with reliable international partners.
Step 2: Choosing a Trade Name
The next step is to send an application to the Department of Economic Development. Before doing it you’re to think of a trade name for your firm, which DED is supposed to register as a new one. Before sending an application make sure that your chosen name meets all the requirements, e.g. it should not consist of parts of already existing names and trademarks.
Step 3: Sending a Preliminary Approval Request
The following step is to submit the required application form and the first set of documents to get a preliminary approval. Having this one you would make sure that you still need to go through all the other steps. So to apply for this preliminary permission you need to add to your request following documents:
- Application form
- Passport copies of owner or manager and all shareholders
- Visa copies of all shareholders
- Attested high school or university degree certificates of yours (as a manager) and your partners (if there are any).
Step 4: Getting an approval from RERA
The next step is getting approval from RERA. It would take you to pass 2 tests. The first one is from Dubai Real Estate Institute and the other one, from RERA itself. Passing both means you know all the peculiarities of local laws and have got a proper qualification level to operate your own business in the UAE.
Step 5: Signing an agreement with local partner
Depending on the type of company structure you choose, you and your local partner are to create, sign, notarize and legalize in local law either Memorandum of Association or Local Sponsor Agreement.
Step 6: Choosing a location place
You can’t start any type of business without renting an office. So you’re to choose a proper location and office and make arrangements with owners through the Ejari system.
Rented premises are subject to strict requirements. It is forbidden to use them for other purposes, for example, an office for a warehouse or vice versa, you cannot live in the same place where you work. All this is strictly controlled. But first you need to document:
- business ownership;
- permission to use real estate;
- compliance of the premises with the plans for its use.
If the tenant plans to rebuild the internal spaces, including the organization of partitions to create individual workplaces, this should be declared before signing the contract and an appropriate clause should be included in it. Also, the contract should include information about the terms of the lease, the physical address of the premises, and the date the contract was signed.
Step 7: Applying for a full license
At this step you can apply for a real estate license for sale in Dubai, which would allow you to start operating as only you get it.
Step 8: Registration with RERA
Having in possession this permission you’re to register your new enterprise in RERA. Just make an application, adding to the form all the documents that you’ve got through previous steps.
Step 9: Getting a permission to hire foreign citizens
In case you’re going to hire workers from outside Dubai you’re to become a sponsor of their visas. For doing this according to the law you’re to get a registration at 2 governmental organizations. The first one is Dubai Ministry of Labour and the 2nd – Dubai Department of Naturalization and Residency.
Step 10: Certificate of Good Conduct
Yet another obligatory document is a Certificate of Good Conduct. To get it, you need to apply to the Police Office, its closest headquarters to the place of your office residence, just to make sure that your work would be completely legal and it would never deal with forbidden and illegal issues.
Step 11: Getting a final approval
Before you may finally start operating in Dubai the last instance where you must approve your business is Dubai Land Department. It’s a special commission, examining the proper work of everything connected to the real estate sphere in the region.
The high profitability of real estate in Dubai is due to the continuous demand from tourists, entrepreneurs and professionals working in foreign companies. Dubai is called the “City of Opportunities” because it has got all the conditions for successful business development. This guarantees a huge influx of foreign visitors to the country who will want to rent accommodation in a good area.
As a conclusion, we can clearly say that the real estate business in Dubai is a wonderful chance to conduct a prosperous project. The reasons are quite obvious: world-class infrastructure, rapidly growing market, beneficial geographical position, supportive regulatory atmosphere, stable economy of the region and low taxes.