Article image: Purchase or lease of warehouses and production facilities in the UAE

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All legal relations between local and federal authorities are stipulated in the constitution of the UAE Full version

Startup of a large industrial or commercial company in the United Arab Emirates entails purchase or lease of warehouse or industrial premises. Each of these procedures has its own features and peculiarities. Thus, when purchasing a warehouse or industrial premises (or any other property) in the UAE, please note: under the laws of the country you usually do not receive property rights for a plot of land on which the purchased property is located. The exception is the emirate of Dubai, where Freehold status may be exercised, that entitles foreigners to purchase warehouses or production facilities together with the relevant land plot.

When purchasing commercial property from the developer, always make sure that he has a right to sell real estate to foreign nationals - not all construction companies are granted such rights. The indisputable advantage of such purchase is its tax exemption status. If you purchase a warehouse or production facilities in the United Arab Emirates on the secondary real estate market, then in addition to the amount charged by property owner, you will also have to pay for title ownership transfer to you in the Land Department - 4% of the warehouse value, and for real estate agent services - from 2% and upwards. In most cases the procedure of registration of such documents and title transfer takes just a few days.

Lease of warehouse or production facilities in the UAE

The possibility of a warehouse lease and its features or production facilities in the Emirates depend on the type of company. In particular, owners of offshore companies are prohibited by law to lease commercial premises. Only onshore company may lease a warehouse in the UAE. Furthermore, if it is registered in one of the FTZ, it may lease property only in that particular FTZ. Another important condition is that the type of premises shall comply with company’s business activity. So if you intend to lease a warehouse in the UAE, then the leased real estate should have a status of warehouse.

In conclusion it is worth noting that one should think about lease or purchase of warehouse at the stage of company registration. Having opted for an inexpensive option for starting business in the UAE, you may further face the problem of insufficient availability of proper warehouses and other commercial premises necessary for business. Besides, having saved on registration, you then may be charged an exorbitantly large amount for lease of real estate. Therefore, in order not to waste time and money, you should check availability, costs and other aspects related to purchase (lease) of warehouse at the stage of choosing the best option for registering a company in the UAE.

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