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Offices and retail rents in Dubai’s free zones suspended for 6 months

05.04.2020
Even private landlords are now forced to provide their tenants with rental free periods for up to six months.

Due to the fact that Dubai free zones now offer rent-free periods for up to six months for offices, shops and other commercial properties, private landlords owning leasable commercial premises are now forced to provide incentives and discounts, sometimes even better than those provided by the management of free economic zones. At the very least, private homeowners will now have to review rent payments and charge them in installments, as is now happening in free zones.

The decree for rent free period for six months now applies to all free economic zones and came into force on April 1.

Earlier, DMCC, Dubai’s free zone management company in Jumeirah Lake Towers (JLT), announced a 100 per cent cut on office sharing permit fees and on company “reinstatement”. In addition, a 30 per cent discount is provided upon license renewal. To date, about 17,000 companies are registered within DMCC.

Overall, Dubai’s and the UAE’s free zones now offer much more favorable rates for office spaces and coworking rentals, than those offered by private operators, local and international. This is especially true for startups.

In the UAE, there are 19 free zones that offer 57 decent options for startups to test the ground. Free zones also have another advantage — a work licenses provided, while private business centers can provide only office space, but not a license.

Which Dubai free zones offer the best options for business operation?

The expenses for the first year of the company’s performance start from AED8238 in Ajman Media City free zone, and reach up AED81,395 in DMCC. (This was before DMCC announced a 6 months rent-free period at the end of last week.) Another Dubai’s free zone Dtec (Dubai Technology Entrepreneur Campus) in the Dubai Silicon Oasis area offers the cheapest option — the first year at a price of AED20 395 (and then even AED16 075) for startups in the field of IT services.

PACKAGES OF ANTI-CRISIS ASSISTANCE TO TENANTS IN THE DUBAI’S FREE ZONES

  • DMCC will not charge rentals for outdoor retailers at Jumeirah Lake Towers (JLT) for a certain period of time under existing contracts where the DMCC is the owner/landlord of the building. Also, free rent for two months will be guaranteed for commercial enterprises, which were affected by the latest Dubai directive, requiring the temporary closure of their business.

  • There will be no rents charged during 3 months from flexi-desk tenants (“virtual offices”) in DMCC, and for office tenants in the DMCC Business Center. Tenants in the DMCC Business Center can also choose to pay rent on a monthly or quarterly basis, but with no discount in this case.

  • AED 5000 — this license fee is set for young entrepreneurs in Ajman Free Zone.

Many Dubai’s free zones do not require a personal presence and audit, which saves investors time and money. However, most of the offers aimed to help tenants are targeted at new tenants, although it is not yet clear how the new incentives will work for existing tenants.

Taking to account the fact that free economic zones of Dubai now provide free rent for 6 months, what should private landlords of commercial properties do? Some already provide three-month rent-free periods, which can be extended upon lease agreements renewal.

In addition, market sources say that due to offering reduced licensing and other fees, owners of commercial spaces in the public sector have an advantage. With more office space coming to the market in free zones, new measures will become an additional incentive for many tenants to move there. In the current period of high demand for offices, even a slight economic benefit for tenants can be crucial.

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IMEX REAL ESTATE BROKER LLC, UAE

Office 2502, Marina Plaza, Dubai Marina, Dubai, UAE

Email: pm@IMEXre.com


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