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How To Start A Commercial Brokerage Firm In Dubai

Dec 9, 2023 | Entrepreneurship

Obtaining a commercial brokerage licence in Dubai is a gateway to entering this dynamic city-state’s thriving real estate market. With Dubai’s robust economy and strategic location, setting up a commercial brokerage firm here offers numerous opportunities for savvy entrepreneurs. In this guide, you’ll discover the essential steps, from selecting your business activity and choosing a business name to applying for the necessary trade licence and visas.

We’ll also delve into preparing the required documentation and understanding the fees for securing a commercial brokerage licence. Whether you’re a seasoned broker or a newcomer to the industry, this article will provide a roadmap to launching your retail brokerage business in the heart of the Middle East.

What Is Commercial Brokerage

Commercial brokerage is a specialised field within the real estate industry, focusing on the buying, selling, and leasing of commercial properties. A commercial broker acts as an intermediary between parties involved in real estate transactions, facilitating negotiations and the signing of contracts. These professionals are skilled at handling various types of commercial properties, including office spaces, retail locations, and industrial sites.

The role of a commercial broker can vary depending on who they represent in a transaction. When working with landlords, brokers focus on marketing the property, attracting potential tenants, and negotiating terms that yield the best possible returns for the landlord. They’re known as ‘listing brokers’ and are responsible for listing the landlord’s property and finding qualified tenants.

Once a lease is signed, listing brokers typically earn a commission. This is a percentage of the rent paid over the lease term, usually ranging from 3 to 6%.

On the other hand, brokers representing tenants, often called ‘tenant reps’, concentrate on securing the most suitable commercial space for their clients’ business needs. They offer objective advice and work hard to find the best deal, as their commission isn’t tied to any specific listed property. Tenant reps are compensated with a market commission by the landlord after the lease agreement is finalised.

In some markets, it’s not uncommon for a broker to serve landlords and tenants as a dual agent or by switching roles depending on the opportunity. This flexibility allows brokers to leverage their expertise and market knowledge to benefit different clients. However, in such cases, the broker must act as a neutral party, ensuring fair representation for all involved.

Commercial real estate brokers are expected to thoroughly understand market trends, tax and zoning laws, financial analysis, and property management. They start their careers with a licence similar to that of residential real estate agents. Still, they must undergo additional training and education to specialise in commercial transactions. This includes advanced classes and continuing education leading up to passing a licensing exam.

After gaining experience and obtaining a broker’s licence, these professionals may choose to open their own commercial brokerage firm or join an existing one. The career of a commercial real estate broker can be gratifying. It requires a significant investment in learning and understanding the intricacies of the commercial market, as well as the specific needs of their clients. Brokers play a crucial role in navigating the complex landscape of commercial real estate transactions, whether they’re assisting with purchasing, selling, or leasing commercial properties.

Screenshot Of Website For Licencing

(source: https://dubailand.gov.ae/en/eservices/training/#/)

How To Start A Commercial Brokerage Business In Dubai

Select Your Business Activity

When you’re ready to set up a commercial brokerage firm in Dubai, the first step is to pinpoint the specific business activity you plan to engage in. Dubai’s dynamic market, especially its booming real estate sector, offers many opportunities for brokerage firms. Whether you’re looking to facilitate transactions in property, financial markets, or insurance, it’s important to understand your role as a broker acting as an intermediary in negotiations and contract signings.

Brokers in Dubai can operate in various roles, such as real estate brokers who handle property sales and rentals, financial investment brokers who advise on securities, or insurance brokers who assist clients in finding suitable insurance policies. You’ll want to select an activity that matches your expertise and market demand, as this will be the cornerstone of your brokerage services.

Choose Your Business Name

After deciding on your business activity, the next crucial step is to pick a suitable business name. This name will represent your brand identity and must follow the regulations of the DED. The chosen name should be unique, not already taken by another entity, and should avoid any offensive or prohibited terms.

It shouldn’t suggest any affiliation with political or religious organisations, nor should it give the impression that it’s a government entity. The name should mirror the nature of your brokerage business and comply with the legal structure acronyms such as LLC or EST. You’ll also want to be mindful of cultural sensitivities and ensure the name doesn’t offend any religious or personal sentiments.

The DED is in charge of approving your business name, and it’s smart to have a few alternatives ready in case your top choice isn’t available.

Apply For A Trade Licence

You can apply for a trade licence with your business activity defined and your business name chosen. In Dubai, the type of licence you’ll need depends on your brokerage firm’s activities. The application process requires you to submit a form with your company name in both English and Arabic, the original lease contract for your business premises, and proof of payment for the licence fee.

The Meydan Free Zone and other free zones provide a streamlined process for obtaining a commercial licence, offering quick establishment and access to a broad range of business activities. The initial licence is valid for one year and is renewable. An innovative initiative called “Instant Licence” enables you to get a commercial licence quickly, without needing a company lease or location in the first year, making starting up even more accessible.

Apply For Your Visa

Lastly, to legally reside and run your business in Dubai, you’ll need to secure a resident visa. This visa is essential for business owners and their employees, allowing them to live and work in the UAE. The visa application process is linked to the trade licence. Once you’ve got your commercial licence, you can also apply for visas for your dependents.

The visa permits you to operate your business in Dubai. It offers additional perks, such as no corporate or income taxes and a streamlined financial reporting system. You’ll need to make sure all necessary documents, including the trade licence and lease contract, are ready to ensure a smooth visa application process.

How To Get A Commercial Brokerage Licence In Dubai

Preparing the Necessary Documentation

To establish your commercial brokerage firm in Dubai, you’ll need to compile the required documentation as stipulated by the DED and RERA. This includes personal identification documents such as a copy of your passport, Emirates ID card, and, if applicable, a family book. A passport-sized photo with a white background is also necessary.

It would help if you had the tenancy contract and the Ejari certificate ready. If your entity is a company, the articles of association are essential. A real estate brokerage licence is obligatory for those entering the real estate sector. The DED and RERA demand a comprehensive set of documents, including the application for DED, trade name reservation, initial approval receipt, and a certificate of good conduct from the Dubai police.

Additionally, you’ll need to provide evidence of your educational qualifications, such as a degree certificate. A certificate or degree in a real estate practitioner course is important as it emphasises the importance of professional credentials in this industry.

Application Forms and Submission Deadlines

The path to obtaining a commercial brokerage licence in Dubai is facilitated through digital platforms, especially in free zones like Meydan, which integrate licensing with compliance and regulation. Your initial step is to reserve a trade name via an online DED application, which must conform to the UAE’s naming conventions. Then, you’ll submit an application form along with the required paperwork, including passport copies for all shareholders and the manager and attested copies of their academic qualifications.

Completing the RERA Course, which typically spans about two weeks, is also necessary. Success in this course is critical as it provides RERA clearance, which is essential for operating in the real estate brokerage sector. Once your documents are prepared, including the DED licence copy, application form, tenancy agreement, location map, and RERA course receipt, you’ll submit these to RERA to obtain your registration certificate.

The final step involves registration with the Dubai Naturalisation and Residency Department (DNRD) and the Ministry of Labor, culminating in acquiring your commercial brokerage licence.

Fees and Costs Associated with Licensure

The financial aspect of establishing a commercial brokerage firm in Dubai encompasses various expenses. These will fluctuate based on factors such as your office location, the number of employees and their insurance, as well as the fees for the licence and visas. The base cost for a commercial brokerage licence is  $3,400 (AED 12,500), but this is merely the initial amount, and you may incur additional expenses tailored to your firm’s particular requirements and scale.

If you intend to reside in the country, obtaining a resident visa involves its own procedures and costs. The visa application process entails securing an entry permit, status adjustment, a medical examination, and issuing an Emirates ID and visa stamp. It’s feasible to apply for visas for your employees and family members concurrently with your own visa application, simplifying the process for those determined to establish a robust business presence in Dubai.

Screenshot Of DED Website

(source: https://dubailand.gov.ae/en/eservices/training/#/)

Benefits Of Starting A Commercial Brokerage Firm In Dubai

Dubai’s ascent as a global business hub has been meteoric, with its economy diversifying into industrialisation, trade, tourism, and manufacturing sectors. This diversification has contributed to its reputation as a leading commercial centre, ranking 17th worldwide. The emirate’s strategic location and robust trade links, particularly with economic giants like China, India, and the United States, have been pivotal in its economic success.

The emirate’s government policies are particularly conducive to business, offering a liberal regulatory environment and an efficient administrative infrastructure. Moreover, Dubai’s tax regime is favourable for new businesses, with no personal or capital gains taxes and a modest VAT rate of 5%.

Dubai’s world-class aviation facilities ensure excellent connectivity, facilitating the swift movement of goods and services, which is vital for commercial brokerage operations. For entrepreneurs new to Dubai’s business landscape, numerous consultants are available to guide them through the intricacies of registration, licensing, and legal compliance.

Dubai’s demand for commercial spaces remains robust, driven by a flourishing economy and a supportive business environment. Investors and businesses are drawn to high-quality commercial assets offering secure and growing passive income streams. The commercial property market is particularly known for its potential for high rental yields and stable income. The total stock of office units in Dubai is substantial, with nearly 9 million sq. m of GLA recorded in 2021, and the trend is towards small, ready-to-move-in units with Category A fit-outs.

The One Free Zone Passport initiative has further stimulated demand for office spaces by enabling free zone companies to operate in mainland Dubai. Despite the impact of the COVID-19 pandemic on various sectors, the UAE’s economy has displayed remarkable resilience. The real estate market has benefited from major groups offering support measures such as rent reliefs and deferred payment plans.

The tourism sector, invigorated by events like Dubai Expo 2020, has also contributed to the GDP, reinforcing Dubai’s status as a commercial nexus. With a fragmented yet growing real estate market, developers are innovating with new, cost-effective products and leveraging technology to enhance transactions and asset management.

Launching Your Commercial Brokerage Business

Your firm will be instrumental in streamlining the interactions between various parties in real estate dealings. Success hinges on meticulous planning and adherence to the emirate’s business regulations.

Setting Up Your Brokerage Firm

After determining your niche within the brokerage industry, you’ll name your enterprise per local regulations. The digital process for obtaining a trade licence, particularly in free zones, is designed for efficiency. Additionally, securing a resident visa is a prerequisite for those intending to reside in the UAE. Keep in mind that the initial licensing fee is subject to variation based on specific business needs.

Meeting Local Zoning and Business Licence Requirements

Understanding and complying with local zoning and licensing mandates is critical for lawful operation. The proximity of Meydan Free Zone to key urban centres and its comprehensive support services streamline the setup process, allowing you to concentrate on client acquisition and business expansion.

Developing a Business Plan and Strategy

Crafting a robust business plan and exploring growth opportunities are essential. Collaborating with entities that offer synergistic services can facilitate your firm’s launch. Exploring new markets and considering strategic mergers or acquisitions may enhance your presence in the industry. Agility in strategy formulation is key to thriving in the competitive landscape of Dubai’s brokerage sector. With a conducive environment for business development, Meydan Free Zone aims to nurture companies from inception to success.

Embarking on Your Brokerage Venture

As the curtains draw on the preliminary steps to launching your commercial brokerage firm in Dubai, the excitement builds with the realisation of your entrepreneurial dreams. Stepping into Dubai’s dynamic market, your well-crafted strategy and compliance with the emirate’s business practices set the foundation for a thriving enterprise.

Your journey has been carefully mapped out, from pinpointing your niche in the brokerage sphere to securing the necessary licences and visas. As you embark on this venture, remember that adaptability and a keen understanding of market dynamics are your allies. Embrace the opportunities inherent in Dubai’s rich commercial landscape and watch your business flourish in this fertile ground for growth and innovation. Welcome to the future of commercial brokerage — your future.

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