The real estate industry is a flourishing business. All around the globe, the real estate market remains one of the most lucrative businesses. Not just for investors, the sector offers ample earning opportunities for all concerned parties.
For instance, a real estate agency is one of the most well-known businesses associated with the property industry. The chances of thriving in the industry are further enhanced if the business is functional in a flourishing economy.
The UAE, among other reasons, is greatly known for its prospering real estate market. With futuristic cities like Dubai and other Emirates having attraction points of their own, opening a real estate business is a formidable option. We will do a detailed guide on how to set up a real estate business in the UAE, the requirements and what makes the country a haven for property-related business.
Real Estate Agency in the UAE
The UAE is home to many state-of-the-art buildings that are among the most popular global attraction points. The presence of some leading real estate developers in Dubai, Abu Dhabi and other cities further cements the UAE’s place as an ideal destination for real estate investments.
However, property investments particularly those in luxurious projects require huge chunks of money. This makes opening a real estate agency a viable option for many. That said, let’s go through some major considerations to know before setting up a real estate agency in the UAE.
SCOPE OF A REAL ESTATE AGENCY
The earning possibilities in the real estate sector aren’t limited to investment in projects or renting a property. With a real estate agency, you can be a part of the property market and earn healthy profits.
When buying or renting any of the types of properties in the UAE, people prefer to hire real estate agency services to ensure a smooth process. The property buying or renting process can be long and stressful, particularly if you are not aware of the formalities.
Moreover, there are certain legal requirements to be fulfilled. A step in the wrong direction can result in fines and punishment.
All these make the real estate agency a highly in-demand business. All in all, people can set up a real estate agency in the UAE and be a part of one of the largest growing sectors.
THINGS TO KNOW BEFORE OPENING A REAL ESTATE AGENCY
As intriguing as starting a real estate agency in the UAE may be, there is a set of rules to follow to conduct business. Whether you become a real estate agent in Dubai. Abu Dhabi or any other city, or decide to open an agency, it is important to be aware of the formalities and regulations to avoid any conflict with the law.
Moreover, it is important to note that the property industry in the UAE is a competitive market.
There is a large pool of real estate agencies in the UAE and the ones with authentic and quality services thrive. Like every other business, success in the real estate industry depends on services and efforts.
However, by adhering to the laws and keeping things legitimate, you can increase the chances of making a name in the industry. Do thorough research before stepping foot in the market and get familiar with the laws. Learn about the property market of the country and find out about all legal obligations.
ADVANTAGES OF OPENING A REAL ESTATE AGENCY
The many benefits of hiring a real estate agent in the UAE further highlight the great scope of an agency. That said, there are several other benefits of starting a real estate agency in the UAE.
- Highly lucrative business – Some of the high-end projects can help the agency and agents earn great commissions on closing the deals. Moreover, agencies can also offer consultancy services and expand their income channels.
- The real estate industry is one of the largest sectors in the UAE. Being a part of the established and growing sector increases the chances of a business thriving.
- No property tax in the UAE makes opening a real estate business all the more intriguing. Agencies can own properties and avail the many benefits that follow. However, other costs such as property transfer and registration fees must be kept in mind.
- Foreigners who want to set up a real estate business are also eligible for a property investment visa in the UAE. Real estate agencies who step foot in property investment can avail of this offer as well.
- The UAE is second to none when it comes to law and order conditions. There is strict adherence to laws and everything is in order. The safe and serene environment makes it a viable option to start a real estate agency or any legitimate business in the UAE.
- There is a huge influx of expats in the UAE. The majority expat population has a direct effect on the property market with more and more people looking for places to rent and buy. This also makes starting a real estate agency a viable option.
- The UAE is a top travel destination with world-class infrastructure. The country attracts a huge number of tourists every year.
- The right set of rules and regulations is great for any economy. The UAE has a regulated market that provides an ease to do business. A real estate agency among other businesses can be a great start for locals and foreigners.
Steps to Open a Real Estate Agency
The many advantages of a real estate agency in the UAE make it a hard pass. The main part is to set up a legitimate business and follow all the rules. One shouldn’t pay attention to the UAE real estate myths to avoid making impulsive or wrong decisions.
Additionally, it is important to be aware of the steps on how to start a real estate business in Dubai, Abu Dhabi or any other city in the UAE.
That said, let’s now go through a step-by-step guide on how to set up a real estate business in the UAE.
STEP 1 – CHOOSE THE COMPANY’S BUSINESS MODEL
It is essential to choose the business model wisely when starting a business in the UAE. The business model plays an important part in the rest of the proceedings.
Foreign nationals who want to be registered as sole owners need a free zone licence in Dubai. For the rest of the country, 51 percent of most businesses need to be owned by UAE nationals. The business models are as follows:
- Sole proprietorship – There can only be one business manager with no minimum capital requirements for the business.
- One-person liability company – In this model, the shareholder’s liability is limited to owned share’s value.
- Civil company – For this model, the professionals can be foreign nationals. However, if they are not UAE nationals, they would require a local service agent.
- Limited liability company (LLC) – For a limited liability company, 51 percent ownership by a UAE national is compulsory.
- Partnership company – There are no restrictions on ownership. Foreigners can be limited partners while UAE nationals should be general partners.
There are several free zones and mainland areas in Sharjah, Dubai and other cities of the UAE. People looking for complete business ownership can opt for the mainland areas. However, the UAE nationals will operate as free agents in this case.
The UAE nationals will work as a sponsor and ensure business practices are carried out as per the owner’s requirements.
STEP 2 – GET THE COMPANY REGISTERED
The next step in opening a real estate agency is to get the company registered. To do that, you should think of a company name. Avoid using a name that may be blasphemous, offensive or obscene in any way.
It is a wise move to incorporate ‘real estate’ in the company name since it gives a clear idea about the business activity. The company along with the trade name should be registered with the Department of Economic Development (DED) in Dubai and through economic departments in the other Emirates.
The documents required for company registration are as follows:
- Business plan’s application form
- Memorandum of Association (MOA) and Articles of Association (AOA) authorised by the authorities
- Sponsor’s passport to ensure their UAE citizenship
- NOC obtained from the sponsor
- Bank reference letter for all shareholders
COMPANY REGISTRATION COSTS
For a commercial business setup in Dubai mainland, the charges are as follows:
- Initial approval (one-time government charges) – AED 120
- Name approval (one-time government charges) – AED 620
- Memorandum of Association (MOA) (one-time government charges) – AED 1,500
- Market fee (annual government fee) – AED 250
- Foreign trade name (non-Arabic or other than the owner’s name) annual government fee – AED 2,000 to AED 3,000
With all affairs in order, initial approval is granted. However, for activities related to legal, security, financial and commodities affairs, some additional approvals may be required.
STEP 3 – GET A BUSINESS LICENCE
Business licences are mandatory to operate a business in the UAE. There are different types of business licences in Dubai, Abu Dhabi and other cities of the UAE. For a real estate business, a commercial licence is required.
It is important to know the requirements for applying for a licence. For a real estate business, there are some mandatory courses to be done through the Real Estate Regulatory Agency (RERA) in Dubai.
Other government services such as TAMM Abu Dhabi also require you to complete a compulsory training course to be eligible for a business licence.
In order to get a business licence, you must submit the following documents:
- Trade name certificate
- Initial approval certificate
- Registered office’s leasing contract
- Memorandum of Association (Applicable for a single-person company, LLCs, Simple Limited Partnership, Private and Public Shareholding Companies, Civil Companies or Partnership)
- Local Service Agent Agreement (Applicable if a UAE resident represents your business concerning licensing and compliance)
- Government body approvals (for certain types of business)
A commercial licence costs AED 10,000, however, the overall charges for setting up an agency may vary. You should consider the registration fee, visa fee and other government charges to get a full estimate.
STEP 4 – SETUP A PROFESSIONAL OFFICE
A physical office adds credibility to your business and it is important to get a professional office for conducting the operations. You can either choose to rent an office in Dubai free zones or any of the other cities.
People who are not UAE nationals should be aware of the property buying and ownership laws in Abu Dhabi, Dubai and other cities of the Emirates. Familiarity with these laws can help you choose an office for sale in the UAE to start your business.
Fines for Conducting Business Against the Law
If you have decided to set up a real estate business in the UAE, it is compulsory to follow the laws. Conducting business against the rules and regulations can result in hefty fines and imprisonment in some cases.
That said, listed below are some of the fines and penalties for carrying out business practices against the law:
- Conducting business without a licence – AED 5,000 fine
- Running a business in an unregistered area – AED 1,000 fine
- Non-renewal of business licence on time – AED 250 fine
- Overlapping the existing business licence – AED 2,000 fine
- Illegal subletting – AED 25,000 fine, AED 50,000 for a repeated offence
- Violation of licence conditions – AED 1,000 to AED 100,000 fine
In addition to these, there are some other penalties for other operating businesses against the law. It is better to be aware of the real estate property violations in Dubai, Abu Dhabi and other cities of the UAE. That said, a business may incur penalties for the following activities:
- Not getting a proper licence
- Starting a business while still employed
- Lack of written contracts and agreements
- Not accessing worst-case scenarios
- Conducting business activity at an unregistered location
- Not complying with work-hour permits
- Adding or changing activity without approval
For continued violations, authorities may be forced to take action and a company may be blacklisted or a ban on expansion could be imposed.
Important Registration and Requirement Links
Most of the aforementioned services and applications can be submitted online. Listed below are some useful links to help with the registration and requirements in each Emirate:
- Dubai – Dubai Economy and Tourism
- Abu Dhabi – Abu Dhabi Department of Economic Development
- Sharjah – Sharjah Economic Development Department
- Ajman – Ajman Department of Economic Development
- Umm Al Quwain – Umm Al Quwain Department of Economic Development
- Ras Al Khaimah – Ras Al Khaimah Department of Economic Development
The charges, requirements and applications can all be accessed through the official websites. It is advisable to go through these government websites for up-to-date information and any changes in the process.
This is everything you need to know for starting a real estate business in the UAE. The real estate market is one of the largest sectors in the UAE. People who want to set up a real estate agency in the country can do so and avail the many perks that follow.
For instance, VAT-free property transactions among many initiatives portray the government’s interest towards further enhancing the flourishing sector.
Additionally, if you are a foreigner setting up an agency in the country, the UAE real estate terms and real estate glossary can help you get familiar with the common market phrases.
Moreover, people looking for a good place to set up a real estate business in the UAE can check out the following:
Stay tuned to dubizzle’s property blog for real estate business opening guides and more.
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