The land is one of the vital elements that has been one of the essentials of living beings available on this planet. The term “Real Estate” gets blend with land, building or stabled structures that are used for multiple purposes that cover residential housing, commercial offices, trading spaces, theatres, hotels, retail outlets, factories etc. The concept of real estate industry involves in dealing with the purchase and development of land to meet the personal and commercial building requirements. The key players involved in the complete process includes landlords, developers, builders, tenants, buyers, real estate agents etc. The continuous growth of the real-estate sector in the global level has provided leverages to other business sectors to come forward and capture respective markets.
The United Arab Emirates stands as one of the topmost grounds when it comes to tourists, and also serves as a home to millions of more than 200 nationalities. Thus, the region has got a high demand when it comes to the real-estate sector and turns out to be a lucrative investment option for global investors to come forward and invest. This guide has been drafted to help the investors and business professionals who are keen on investing in the UAE real estate sector by giving a complete view regarding the regional view regarding the industry.
The Real Estate Market in the UAE
In 2018, the real estate market in the UAE had witnessed significant developments with a decrease in the sales and rental prices due to the region of abundant supply. The year was regarded as a buyer’s market as there was a significant rise in the number of buyers. The Government of Emirates also played a strategic move by infusing new visa reforms and proposed regulations. From 2019, ex-pats present in the UAE aged 55 or above will be eligible to secure a five-year retirement visa. Property investors who invest in the UAE worth Dh5 million will be granted a five-year residency visa. Each emirate will be affected by the drastic decision made and will have a significant spike in demand.
Over the past few years, the government has taken necessary steps to focus and diversify the real estate segment. Dubai, being the heart of the UAE, has been contributing significantly in coping up with the required changes and, thus, has focused substantially on all possible segments.
Recently, the government had taken the initiative of introducing long term residency permits called the “Golden Card” which allows long term residency permits for investors and exceptional workers dealing in the sectors of health, engineering, science and art. Until the Q2 of 2019, almost 400 golden cards have been issued and targets a count of 6,800 to be issued by the end of the year.
The business investors have got complete flexibility to invest in any of the available segments when it comes to investment in the real-estate business.
Budding entrepreneurs, as well as experienced professionals, prefer to implement their business ideas in the ground of UAE. The demand for operating business has been continually rising, which demands office, co-working and customized office space solutions. Investors prefer to invest in the real estate office market, as there exists a huge demand.
The retail sector stands as one of the top-performing business industries that significantly contributes to the GDP of the nation. The space requirement for the retail outlets have been continuously growing and is expected to reach the next level within a few years. According to the reports, by the year 2020, 8 new malls are going to get inaugurated in the land of UAE. To know more about the retail industry in the UAE, click here. Below mentioned are the space supply dedicated to the retail sector in Dubai.
The growth in the tourism industry has got a drastic impact on the hospitality sector that equally demands proper land and space to execute their operations. There has been significant growth in the hospitality sector over the few years in the United Arab Emirates and is expected to reach its next level by 2020 to suffice the global count of 25 million visitors.
The number of tourists has been spiking up, which is increasing the inhabitants in the region of UAE. According to the Dubai Statistics Centre (DSC), the population of Dubai has grown from approximately 8,60,000 in 2000 to 3.1 million in 2018. The growing population turns up the residential market, which is focusing on low sales price, thus increasing the supply to drive in and strengthen the local currency. In 2018, the average sales price approximately declined by 8%, holding a value of AED 1.24 million.
The continuous growth in the business establishments demands more office space which stands as one of the lucrative markets for the real estate dealers and investors to suffice the need. In the first quarter of 2019, Dubai’s office market witnessed a limited demand. Every business sector is paving out new ways to grow as the World Expo 2020 is on the road, and thus, there exists a large market to capture. Below highlighted are the Dubai average office rents and demands by each of the sector.
Industrial and Logistics Market
The industries and logistics sectors stand as one of the essential business segments that contribute significantly to the development of the economy. Numerous initiatives have been taken by the government to improve the sectors by the warehousing and logistics sector to drive the revenue by Expo 2020.
How to Start a Real Estate Business in the UAE?
The incorporation of a real estate business in the grounds of the UAE involves the following steps:
1. Location and Business Structure
The location of a company determines its success to a great extent. The area of UAE provides multiple business location benefits to the investors to select among Mainland, Free Zone and the Offshore location according to the number of shareholders present and business capital available.
Once the location gets finalized, the next move is to complete the business structure that represents the type of the company that will be incorporated. In the real estate sector, a business professional can select any one of the structures from the below list:
- Sole Proprietorship
- General Partnership
- Joint Venture
- Public Shareholding
- Private Shareholding
- Limited Liability Company
- Professional Company
2. Trade Name
Once the business structure gets finalized, the next step is to register the trade name with the Department of Economic Development in the Emirates. It is to be kept in mind is to include “Real Estate” or “Broker” in the trade name, which will quickly speak about the business services that will be carried out during the business life-cycle of the business entity.
3. Business License
The next step is to obtain a business license for the business entity, which stands as a legal permit that will allow to carry out the business activities in a proper way. In the grounds of the United Arab Emirates, it stands as a mandate for the business entity to obtain a business license to carry out the respective operations. The real estate business needs to gather the approval and authorization from the UAE Government and the Real Estate Regulatory Authority (RERA) in Dubai.
4. Hire Back-Office Services
To ease out the business activities and professionally maintain each domain, the business entrepreneurs in the UAE prefer to go ahead with the professional experts when it comes to maintenance of several activities like back-office, real estate accounting, keeping track of the company expenses and revenue generated etc. The core idea behind hiring the pro services is to utilize the time in much productive way and devote maximum time in future planning and strategizing.
The Future UAE Real Estate Market
The projections state that each of the Emirate will be seeing a drastic growth in the real estate sector. Below-mentioned is the projections for the Capital city Abu Dhabi, and the City of Gold ‘Dubai’ that attracts the maximum tourist.
Proceeding ahead with the real estate business segment stands as one of the excellent investment choices. However, the business professionals are keener in grabbing the leverages that the ground provides for the amount that gets invested.
Benefits of Starting a Real Estate Business in the UAE
Here are some of the benefits of proceeding ahead with a real estate business in the ground of United Arab Emirates:
1. Lucrative Market
Business incorporations, foreign ex-pat settlements have seen tremendous growth when it comes to the land of UAE. Investing in the real estate market sounds to be a profitable one because there exists a huge demand in all the possible categories. Every business sector be it industrial, retail, educational, etc., do need land to execute their business activities. The government has been taking multiple initiatives that would drive the count of business sectors in the UAE, which reveals that the real estate sector will have a high demand in the future.
2. Tax-free Jurisdiction
One of the driving agents that grabs the attention of international investors to invest in the region of UAE is the tax-free benefit that the area holds. The government has exempted the income-tax and individuals have complete freedom to earn lump sum without paying any taxes. However, since 2018 the VAT has been implemented by the government of UAE, which mandates the business professionals to pay 5% consumption tax who are involved in the supply chain process.
3. Expo 2020
One of the most awaited events, World Expo 2020 is on the way that would leave a tremendous impact in the nation along with the global regions. The event is expected to fetch-in a crowd of 25 million global tourists and is looked forward as a destination for business collaboration. The event is expected to have a positive impact in the UAE property sector, as it would drive the international tourists to come ahead to visit Dubai and simultaneously increase the number of residents in the nation.
4. Complete Repatriation of Capital Invested and Profits Earned
The UAE investment rules allow the business investors to relax and become carefree regarding the repatriation of capital invested. Upon discontinuing or liquidation of the company, no extra tax needs to be paid, and the owner can carry back the total capital and profits to the home country.
5. Complete Repatriation of Capital Invested and Profits Earned
The United Arab Emirates stands as the perfect investment destination for business professionals dealing in the real estate sector. Incorporation of a company and to operate the relevant activities, there are specific guidelines set by the UAE Government, which needs to be abiding the foreign investors. Handling the incorporation process with the help of business experts eases the process and can complete the relevant proceedings at one go.
How Can Commitbiz Help?
Who are we?
Commitbiz Consultants is holding the position of one of the best business consultants in the UAE. Our professional experts are well-versed with the incorporation procedures and maintain a vision to accelerate your business.
What do we do?
As business experts, our core tasks are:
- Provide business license
- Act as a catalyst between clients and the UAE government
How can we benefit you?
Standing as one of the top ten business consultants in the UAE, we assist you in the following processes:
- Strategize to accelerate your business growth
- Streamline your business activities
- Comply with the legal rules and regulations
- Provide tailored business solutions
- Establish the business pillars post-incorporation process like accounting, taxation etc.
If you are planning to step ahead and set up your company in UAE, do contact us today-we’d be glad to assist.