The UAE is a very popular destination for entrepreneurs from across the globe seeking to set up their businesses as it offers excellent conditions for business (including generous tax incentives), excellent infrastructure, minimum red tape, and so on. You can set up an onshore company that will operate in mainland UAE or a company in the local free zone (an offshore company). Under the local laws, all companies must have an office or a registered address. Onshore companies are required to rent an office in the area of their registration, while FEZ-based legal entities can choose a virtual office. Visit a trusted portal to find out more about a legal address for your UAE company as you should know the cases when office size is important and who can use the registered agent’s address.
General Rules of Renting Commercial Real Estate in the UAE
Office Space Requirements
Before you rent an office in the UAE, make sure you have one of the documents listed below:
- A permit to establish a company in the UAE
- A valid business license
Here are important factors for those looking for an office in the UAE:
- The office premises must be spacious enough for your employees. The minimum required size is 30 sq.m. in total, at least 9 sq.m. per person. Keep in mind that the type and size of your office will define the number of resident visas you will be able to obtain for your employees.
- You cannot locate your office in a residential building: choose commercial real estate only.
- The office you rent cannot be shared with another company. The only exception is the situation when the two companies have the same owner and structure.
- The selected office should be in line with the business activity specified in the license. In other words, you cannot use your office as a warehouse.
Types of Local Offices
There are two kinds of physical offices you can rent in the Emirates:
- Shell & Core: there are unfinished premises you need to renovate.
- Fitted office: these premises are ready to be used and can be rented with furniture or without.
You can also rent a desk from a secretarial company or a private office.
Resident Visas for Foreign Employees in the UAE
The number of visas you will be able to obtain for foreign employees depends on the office premises type and size:
- Flexi desk. This is a virtual office, and you will be able to acquire only 3 local visas for your workers.
- Physical space. This is an office where you need to provide each employee with at least 9 sq.m. of working space. That is, if the area of your office is 54 sq.m., you can get 6 visas.
- Serviced office. This is a fully serviced office giving you the right to get 4 to 5 visas for employees depending on the office size.
Offices for Offshore Companies
If your international company is incorporated in the UAE and you derive 100% of your profits from foreign sources, you cannot rent an office in the Emirates. Your official address will be the address of your registered agent’s office, and you will use it if you decide to set up a bank account for your UAE company. It would be better if your agent’s license was issued for a physical address rather than a virtual one.
Offices for UAE FEZ Companies
Free economic zones are separate zones for businesses, each with its own regulations and authorities. If you set up a company here, you will have an opportunity to choose any office type you like (a virtual office, a separate office with desks in a business center, or a physical office). However, there are free zones that issue business licenses to companies on the condition that they have a physical office in the UAE.
Keep in mind that the opportunities for local office rental will depend on the type of your business license. If you have no valid license, you will not rent office premises that will comply with industry requirements.
Office for a Local Company
Under the laws of the Emirates, all the local companies (also known as onshore companies) are required to rent a physical office in the country. It means a separate office or an office in a business center. In this case, the opportunity to rent a virtual office is excluded.
Renting a Local Office: Expert Tips
We strongly recommend seeking assistance from a registered agent or a qualified lawyer when you sign an office rental agreement – or study the laws of the country and the particular emirate in detail by yourself.
Kinds of Lease Agreements
You can conclude different kinds of commercial lease agreements in the UAE:
- Direct lease. This is a simple lease agreement between the landlord and the tenant that is signed without the involvement of any third parties.
- Sublease between the main tenant and other office users. Under this agreement, the whole office space is rented by the main tenant who then rents out its parts to sublessees by dividing the premises into several sections or offices. If you want to become such a sublessee, make sure that the main tenant has a permit to sublet from the owner and the local authorities. Get a copy of the main lease contract as the sublease may end if it expires or is canceled.
- Lease assignment/extension. The contract sets out each party’s rights and duties and may involve the extension of the lease term or the transfer of lease rights.
Forms of Lease Agreements in the UAE
All lease agreements concluded in the UAE are classified into four types:
- Gross lease. This agreement type means that the tenant pays a fixed monthly rent, while the landlord is liable for all extra expenses not covered by the agreement.
- Land lease. Under this agreement form, the tenant can obtain a land plot and build a commercial building on it. The land along with the building goes back to the landlord when the lease term expires.
- Triple net lease. Under this agreement, the tenant pays all the utilities, taxes, and other office expenses, while the landlord does not contribute anything.
- Modified-net lease. This is the most common agreement form under which the tenant and the landlord share the office maintenance costs.
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