The Ins and Outs of Opening a Real Estate Business in Dubai

Dubai attracts more and more expats every year, with real estate being one of the most active branches in the emirate's economy. Opening a real estate company may be a great idea for those wishing to start a new business. A permanent incoming stream of investment, year-round tourism, a large number of people coming in for work (and more), the availability of high-quality infrastructure and a modern digital system for interacting with the authorities: all of that makes this line of business very promising and potentially profitable. However, to create a successful company, you need to understand the market situation, know the relevant legislation, the subtleties of registering legal entities, and some other details. Here is what you need to know about how to set up a real estate company in Dubai.

• What You Need to Do before Launching Your Business
  
• Where to Register a Company
• Picking Types of Activity and Legal Entity
• Choosing Company Name
• Getting a RERA Permit
• Creating a Memorandum of Association
• Applying for a Trade Licence
• Finding an Office
• Additional Tips
• How Much It Costs to Set Up a Business
  

What You Need to Do before Launching Your Business

Study the Situation

Any real estate market has its own peculiarities, and to organise a successful business, you need to make sure you understand them. A good knowledge of the market, demand dynamics, and pricing will help you to choose an effective business strategy. Experts recommend that you do not rely solely on information from the Internet but rather get acquainted with the state of affairs on the ground. It is also helpful to talk to the current players on the market: they are usually well aware of the current situation and can warn you of pitfalls.

Evaluate Your Financial Resources

A proper distribution of funds especially at the initial stage will help you survive possible crises.

Analyse competitors and the latest trends.

The Dubai real estate market is constantly expanding, but so is the already large list of potential competitors. As a new player, you can increase your share either through lower pricing or by providing new, better, and more customer-friendly services. Try to stay in the loop with the marketing strategies of your competitors, legislative initiatives, and technological innovations. By being one step ahead, you can exploit the benefits to grow your business in the long run and keep it afloat in a crisis.

After completing all the preparations, you can proceed to the next steps.

Where to Register a Company

When choosing a business location in Dubai, you can utilise either of the two options: registering in one of the free economic zones (FEZ) or creating a local mainland company. Both have their advantages, peculiarities, requirements, and limitations.

Registration in a FEZ gives a foreign investor the right to 100% ownership of their business while when registering a local company, at least 51% must belong to a local sponsor (Emirates ID holder). There are no corporate and personal taxes or import-export restrictions on the territory of a FEZ. Moreover, there is the option of full repatriation of capital and profits, and you have the opportunity to obtain a UAE resident visa for investors, employees, and family members. These zones also provide a rich choice of offices for rent, a well-developed logistical infrastructure, production facilities, and inexpensive electricity.

The advantages of registering a local company include quicker registration (a few hours against three to seven business days in a FEZ), no minimal limit for authorised capital, a zero tax rate on profits and income of individuals, a simplified procedure for hiring individuals, an easier procedure for opening bank accounts, permission to conduct business on the territory of any emirate and in any country of the Persian Gulf, as well as interact with governments as customers.

At the same time, amendments to the legislation came into force in June 2021, and now, local companies conducting a certain set of activities including real estate brokerage can be fully owned by foreign citizens. Instead of a partner, you only need a local agent who represents (mostly just formally) your interests before the state.

Picking Types of Activity and Legal Entity

Next, you need to decide what your company will do. This could be a real estate rental or sales agency, a consulting company or, for instance, a construction company. By drafting up the direction of your business, you can more quickly identify the types of services you will need permits for.

At this stage, you also need to select the type of legal entity to be registered. Regardless of the activity you choose, Dubai offers the following options:

• professional company,
• individual private enterprise,
• limited liability company (LLC),
• limited partnership,
• joint venture,
• private joint stock company,
• public joint stock company,
• full partnership.

The option you choose should meet the requirements and goals of your business. For example, for a small business, an individual private enterprise may be the most preferable option while a large business might thrive as an LLC.

Choosing Company Name

Choose a suitable company name that will grab attention and, at the same time, be associated with real estate giving an immediate idea of what you do (for instance, the name may contain the words “broker” or “real estate”).

The name must also comply with the criteria established by the Dubai authorities. Each type of legal entity has its own regulations regarding allowed and banned words and terms in the names, as well as indications of the legal form at the end of the names. Every FEZ has their own registries and restrictions. The latter may concern:

• abbreviations,
• names similar to well-known brands or recently liquidated companies,
• names that do not correspond to the declared activity,
• words that do not correspond to the traditions and culture of the UAE,
• it is prohibited to use the names of government agencies and religions.

A branch company registered in a FEZ must have the same name and the same type of activity as the main company, provided that the activity in question is allowed in this free zone.

To approve and register the selected name, contact the Department of Economic Development or the relevant free zone authorities. Once registration is complete, you will receive an initial approval by email. You will also need to get your documentation approved in Tasheel, the government's online system that covers the full range of application processes for the Department of Human Resources and other authorities.

Getting a RERA Permit

Before applying for a brokerage licence, you must register for a certified course for real estate brokers provided by the Dubai Real Estate Institute (DREI). Most courses last from six to 24 academic hours. At the end of the course, you will need to take an exam.

After that, you need to contact RERA (Real Estate Regulatory Authority), one of the regulatory divisions of the Dubai Land Department (DLD) that sets the rules for the emirate's real estate market. In particular, RERA issues permits to developers and management companies, real estate agents and landlords. That is where you receive your broker ID without which you will not be able to conduct legal activities. You will need to renew your business licence annually.

The cost of the training will depend on your education. For holders of a Bachelor's degree, it will cost from 2,500 to 3,200 AED ($680 to $870). Applicants who do not have that degree will have to pay 6,300 AED (about $1,715). Applicants with no previous education pay 15,750 AED (nearly $4,290).

Creating a Memorandum of Association

The Memorandum of Association (a document serving as the grounds for establishing a company) must be drawn up in accordance with the protocols of the Department of Economic Development (DED) and the UAE commercial legislation. It must be signed by all the founders of the company, certified by a notary, and submitted for certification to the government agencies of Dubai.

Applying for a Trade Licence

You must apply to the Department of Economic Development for a “mainland” trade licence. For one in a FEZ, you need to go to the relevant authorities of the chosen zone. Along with the application, you must submit a certain set of documents. If your application is approved, you receive a licence to provide professional services: the main document for conducting real estate activities in Dubai.

Finding an Office

After obtaining all the necessary permits and certificates, you will have to find a room for the company's office. Having a physical office with a landline will increase the credibility of your business and make you more accessible to customers. Buying or renting an office is a choice you need to make based on your financial capabilities.

Additional Tips

Experts advise aspiring entrepreneurs to outsource some of their work (accounting, mainly). It will be cheaper than hiring your own team of experienced professionals. In addition, you will receive high-quality service and access to financial expertise as well as save time and effort during the adaptation period.

Make sure you give your attention to the recruitment process. It is important to find employees who have experience in the chosen field and the necessary qualifications.

How Much It Costs to Set Up a Business

The cost of opening a real estate business in Dubai depends on many factors: location, jurisdiction, specific type of activity, company size. On average, this can cost you around 30,000 AED ($8,170).

In a Nutshell

Dubai is a rapidly growing city with real estate being one of the most promising business fields. Emirate authorities are devoted to developing the economy in this area and attracting international capital. To facilitate that, there are the simple visa acquisition procedures, tax benefits, zero corruption, and a lot more. Interactions with administrative institutions are strictly regulated, many of the procedures are accessible online. With all that in place, a wisely picked business model and a correct analysis of the market situation may bring you a good profit.

Cover photo: Microsoft 365 (Unsplash)