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How to Open a Retail Shop in Dubai

Nov 28, 2023 | Entrepreneurship

Understanding how to open a retail shop in Dubai is crucial for entrepreneurs looking to tap into the city’s bustling market and cosmopolitan consumer base. Renowned for its luxury retail landscape and position as a global commercial hub, Dubai offers immense opportunities for retail businesses. Entrepreneurs must navigate the city’s business regulations, which include selecting the correct Department of Economic Development (DED) business activity, registering the company, obtaining licences, and securing commercial space.

Additionally, the process involves:

  • Understanding the costs involved.
  • Attracting the right talent.
  • Leveraging Dubai’s status as a tourist haven for marketing.

This guide walks you through the practical steps and considerations for setting up a successful retail outlet in Dubai, from initial planning to opening your doors to diverse customers.

Steps To Open A Retail Shop In Dubai

Dubai’s reputation as a dynamic hub for international trade and commerce makes it an attractive destination for entrepreneurs. Opening a retail shop in this bustling city can be potentially lucrative. Still, it involves navigating a complex landscape of local laws and regulations. To establish a retail presence in Dubai, you’ll need to follow a series of systematic steps, ensuring compliance with the legal framework and capitalising on the city’s strategic location, which provides access to a vast consumer market.

Choose Your DED Business Activity

Your journey begins with selecting the right business activity from the Department of Economic Development’s (DED) extensive list of over 2100 activities. This choice will dictate the type of business licence you’ll need. It may require additional approvals for certain goods, like jewellery or food. Having a clear vision of the industry and area you want to operate in is important, as this will form the foundation of your unique value proposition, helping you stand out in Dubai’s competitive retail shop business landscape.

Register Your Company With The DED

Registering with the DED is a mandatory step for any retail business in Dubai. This involves submitting the necessary documents, which typically include passport copies of all shareholders and managers and visa documentation. If you’re an expatriate, you’ll need a local partner who holds at least 51% of the business, providing support and sharing in the business’s operations. The business registration and process are precursors to obtaining the trade licence and other certifications essential for legal operation.

Man Working In Retail Giving Bag To Female Customer

Get Your Business Licence

Getting a business licence is key to legally operating a retail store or shop in Dubai. The type of licence, which could be commercial, industrial, professional, tourism, agriculture, or freelance, depends on the nature of your business. The cost of obtaining a trade licence varies, but it’s generally considered affordable compared to other global cities. The licence allows you to start your business activities and offers benefits like tax advantages and increased credibility.

Lease Out A Commercial Space For Your Shop

Securing a commercial space is the next step, and you’ll want to make sure that the store and location comply with zoning and safety requirements set by the Dubai Municipality. Your choice of location, whether it’s a bustling area like the Meena Bazaar markets or a prestigious spot like Dubai Mall, will significantly impact your business’s visibility and foot traffic. When renting a space, you may need additional permissions from the Dubai Municipality and other related bodies.

Hire Staff

Hiring staff becomes necessary once your retail space is secured and your business is ready to operate. The recruitment process must adhere to local employment laws. In most cases, you’ll appoint a manager to oversee the shop’s operations. However, your business operates under an Intelaq licence, which is a trade licence designed for home-based Emirati entrepreneurs. In that case, you’re not permitted to hire staff.

Market Your Business

With your retail shop set up, the focus shifts to attracting customers. Marketing your business effectively is key in Dubai’s diverse consumer market, teeming with expatriates and tourists. A robust marketing strategy will help establish your brand and draw in Dubai’s large consumer base. The city’s pro-business environment and modern infrastructure support a wide range of marketing channels, from traditional advertising to digital platforms, allowing for creative and effective promotion of your business plan and new retail shop.

Benefits Of Opening A Retail Shop In Dubai

Highly Sought-After Tourist Destination

The city’s iconic skyline, luxury shopping experiences, and attractions such as the Burj Khalifa and the Palm Jumeirah contribute to its status as a top tourist destination. Its climate is a draw for those seeking warmth in the winter months, and the array of adventure activities caters to a variety of interests.

The steady stream of visitors, drawn by the city’s rich cultural heritage and events like the Dubai Shopping Festival, allows retail businesses to capitalise on the spending habits of a diverse group of tourists. Entrepreneurs can leverage the city’s international allure and first-rate infrastructure by establishing a shop here.

Tax-Friendly

The tax system in Dubai is highly advantageous for businesses, with no personal income tax, sales tax, or capital gains tax and low import duties on non-luxury items. This environment allows for a more profitable operation with reduced financial overhead.

The forthcoming corporate tax rate of 9% on profits over USD 102,000 remains competitive, with certain sectors receiving exemptions. Additionally, the free zones provide further tax benefits, such as 100% foreign ownership and the ability to repatriate all capital and profits.

Low Costs

The costs associated with initiating a retail shop can be modest, particularly in Free Zones. The UAE government’s initiatives to streamline and decrease the cost of business setup contribute to Dubai’s affordability for entrepreneurs.

The provision to reclaim VAT on qualifying business expenditures also diminishes operational costs. These factors, combined with the potential for substantial returns due to the city’s thriving economy and varied consumer demographics, render Dubai a compelling choice for retail ventures.

Great Location With Opportunities For Expansion

Dubai’s geographical position offers easy access to regional and international markets. Its infrastructure, including an extensive road network, a modern metro system, and one of the busiest airports and ports globally, facilitates business growth.

The telecommunications network ensures connectivity and the focus on renewable energy indicates a commitment to sustainability. With a stable political and economic environment, Dubai is an excellent place to launch a retail business and a conducive base for broader expansion. Government initiatives and a diverse talent pool further bolster its status as a prime location for retail businesses aiming for growth.

Customer's Hand Holding Retail Shop Bags

How Much Does It Cost To Start A Retail Shop In Dubai?

The financial outlay for initiating a retail establishment in Dubai can be substantial. The setup costs alone can reach USD 9350. Additionally, you’ll need to consider the price of renting office space, which is a prerequisite for obtaining free-zone trading licences, and the visa fees for your employees, which can increase your startup expenses.

For a new business, it’s prudent to set aside at least USD 25,000 for the first year’s operational costs to ensure a smooth start. The price for a licence or commercial licence, necessary for various commercial activities, can range from USD 2,720 to USD 13,600 annually.

Licence renewal fees can also be significant, falling between USD 3000 and USD 3,540. Rental rates in prime shopping locations like Dubai Mall can fluctuate widely. The cost per square foot can span from USD 270 to USD 1,360, influenced by factors such as proximity to popular attractions and floor level.

International City offers less expensive commercial properties for those seeking more economical options. When considering a location, it’s important to weigh the expected ROI. For instance, Sobha Waves Opulence is projected to offer an ROI of 29.4%, while City Walk’s estimated ROI ranges from 15% to 25%. Dubai Festival City Mall, situated in a developing area, promises substantial foot traffic and potential for capital gains.

For entrepreneurs with limited funds, the minimum monthly rent in Dubai can be as low as USD 680, with the final amount depending on the type and location of the property. This provides a spectrum of choices for those looking to enter the retail market without the high costs associated with premium locations.

Can a Foreigner Open a Shop in Dubai?

Dubai’s economic landscape and policies are conducive to foreign investment, with recent reforms enhancing non-residents’ ease of doing business. The DED has simplified the process for obtaining business licences for non-residents as of January 2023, and the previous requirement for local sponsorship has been abolished in many sectors, allowing for complete foreign ownership.

For those looking to establish a retail presence, the city offers a tax-efficient environment, a strategic position for global trade, and a reputation for safety and luxury. The retail sector benefits from the city’s diverse population and status as a premier tourist destination.

Entrepreneurs can set up a Mainland or Free Zone company, each offering distinct advantages such as varying levels of foreign ownership and operational benefits. Free Zones, in particular, provide incentives like exemption from import and export duties.

The process of starting a business includes obtaining the necessary visas and selecting the right business licence, with requirements varying based on the business owner’s chosen activity. Assistance from legal professionals and engaging with the local business community can provide valuable guidance.

The investment required to launch a business can differ widely. For example, trade licence fees range from USD 4,100 to USD 6,807. Free Zone setups may offer more economical packages, such as Fujairah Creative City’s option starting at USD 6,750, which includes a visa application and access to shared workspaces.

To get a business licence and commence operations, entrepreneurs must register with the DED or the relevant free zone authority, providing a completed application form, passport copies of shareholders, articles of incorporation if applicable, and a business activity description. With the business licence, leased premises, and necessary permits in hand, the retail shop can begin welcoming customers.

Woman In Retail Handing Bag To Customer

How Virtuzone Will Help You Set Up Your Business

Navigating the complexities of establishing a business in Dubai or elsewhere in the UAE can be daunting. Virtuzone has been a guiding light for entrepreneurs since 2009, simplifying the process of company formation.

With over 15,000 companies launched, Virtuzone offers a streamlined, time- and cost-efficient approach, reducing the typical hassle associated with starting a business.

Virtuzone spans more than 50 free zones, providing tailored assistance whether your venture is on the mainland, in a free zone, or offshore. Understanding the nuances of each free zone ensures you find the ideal location for your business, taking into account the unique share capital requirements and regulations.

Virtuzone simplifies the task of selecting and hiring employees, applying for the appropriate licence, aligning with your business goals and ensuring compliance with legal and operational frameworks.

Establishing a corporate bank account in the UAE can present challenges for foreign entrepreneurs. Virtuzone navigates you through the necessary documentation and procedures, which may require a visit to the UAE.

Our consultancy is invaluable in fulfilling these prerequisites efficiently.

Assisting with the recruitment process, Virtuzone aids in obtaining employment entry permits and ensuring compliance with the stipulation that residence visa status is secured within 30 days of an employee’s entry into the UAE. The visa acquisition process can span from 2 to 4 weeks.

Eligible individuals may benefit from the Golden Visa, a long-term residency scheme attractive to investors, entrepreneurs, and highly skilled professionals.

Virtuzone’s comprehensive corporate services are competitively priced, catering to a diverse clientele. Their commitment to facilitating business setup in Dubai is evident in their effective methodology.

Embark On Your Dubai Retail Journey

Dubai presents a thriving stage for your retail aspirations. With its booming economy, strategic location, and investor-friendly environment, the city is a goldmine for those ready to delve into the retail business. Each step is a building block towards your entrepreneurial success, from selecting the perfect business activity to opening the doors to your new shop.

And remember, whether you’re a seasoned business mogul or a fresh face in the world of commerce, Virtuzone stands ready to streamline your journey from concept to reality. As you set your sights on Dubai’s horizon, embrace the spirit of innovation and let the city’s vibrancy fuel your venture. Welcome to the future of the retail industry – welcome to Dubai.

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