Commercial Lease Terms in Dubai: Everything You Need to Know

What is a Commercial Lease?

A commercial lease is a legally binding agreement between a landlord and a business, granting the company the right to use a commercial space, such as an office, shop, or restaurant, for a specified period, at an agreed rental rate and under defined conditions. 

Unlike residential leases, an agreement for a commercial lease has more room for flexibility in its terms, which means tenants must pay close attention to the contract's fine print.

Why Businesses Choose Dubai for Commercial Leasing

Dubai continues to be one of the world’s most attractive cities for business setup and expansion due to:

• A strategic global location and world-class infrastructure

• Highly competitive corporate tax rates of 9% (0% for some small businesses)

• Free zones offering full foreign ownership

• A thriving economy with a highly skilled workforce and a growing consumer economy

• Supportive government regulations 

As a result, commercial leasing in Dubai remains highly sought after, especially in established areas such as Downtown Dubai, Business Bay, DIFC, and Dubai Marina.

Types of Commercial Lease in Dubai

There are key types of commercial leases in Dubai that you should consider. These include: 

Gross Lease

The tenant pays a fixed rent while the landlord covers maintenance, utilities, and other operational costs.

Net Lease

The tenant pays base rent, along with some or all of the operating costs, such as utilities, cleaning, and security.

Turnkey or Fitted Lease

Often used in serviced offices, this structure includes ready-to-move-in spaces, saving time and fit-out costs.

Key Commercial Lease Terms Every Business Should Know

Understanding commercial lease terms is crucial for any business looking to rent their perfect space. Here are some key terms you should be familiar with when signing a commercial lease proposal. 

Rent & Escalation

Commercial rent is typically calculated on a per-square-foot basis. This price should be clearly stated within the agreement, as well as any rent escalations that may occur during the tenancy. Rent escalations can be:

• Predefined increases during the lease term

• Indexed to RERA’s rental index

• Based on sales turnover (common in malls)

• Structured as “step rent” (incremental increases)

According to Article 13 of Law No. 33 of 2008, landlords and tenants can renegotiate the rent before the lease expires. If no agreement is reached, the Rental Dispute Center (RDC) can determine fair market rent.

Lease Duration

Commercial leases often span 3 to 10 years. The lease should clearly define:

• Start and end dates

• Renewal options

• Early termination or break clauses

• Rights of re-entry for landlords

According to Article 15 of the same law, the landlord is required to deliver the property in a usable condition. Clarify who is responsible for routine and major repairs to avoid future disputes.

Renewal Rights

Always negotiate a renewal clause to avoid being forced out unexpectedly. The duration of any renewal should be included, and tenants may request a right of first refusal if the landlord decides to lease to another party.

Maintenance Responsibilities

Commercial tenants should review whether they or the landlord are responsible for:

• AC and electrical system

• Plumbing and water tanks

• Shared facilities and common area charges

Clearly defined responsibilities can prevent costly misunderstandings down the line.

Legal Frameworks and Registration Requirements

EJARI Registration

All commercial leases in Dubai must be registered with EJARI. This is a government system that standardises lease agreements and links them to the Dubai Land Department (DLD). 

This registration protects both parties and is a requirement for applying for trade licenses or visas linked to the premises. 

Applicable Laws

Commercial lease terms in Dubai are governed by laws and regulations including:

• The UAE Civil Code (Federal Law No. 5 of 1985)

• Law No. 33 of 2008 (Amending Law No. 26 of 2007) regulating tenancy in Dubai

• Federal Law No. 1 of 1987 (Civil Transactions Law)

RERA (Real Estate Regulatory Agency), a part of the Dubai Land Department, plays a key role in overseeing landlord-tenant relationships and ensuring compliance.

Common Mistakes to Avoid When Reviewing Lease Terms

When reviewing lease terms and signing a commercial lease, it is essential to avoid several common mistakes. 

How to Lease Commercial Retail Space in Dubai

How to lease commercial retail space involves several key steps, and the process should be undertaken in collaboration with retail leasing specialists in Dubai. Put simply, the steps include: 

1. Define your requirements (size, location, usage type)

2. Check zoning permissions and licensing requirements

3. Shortlist units based on budget and expected footfall

4. Submit a lease proposal with your company documents

5. Negotiate the terms of rent, duration, escalation, and fit-out

6. Register with EJARI to activate the lease.

Tips for Negotiating Your Commercial Lease

To negotiate favourable commercial lease terms, keep these tips in mind:

• Partner with a commercial real estate specialist who can negotiate the best terms on your behalf 

• Benchmark rent against RERA's rental index

• Request a rent-free fit-out period (typically 1–3 months)

• Fix rent escalation rates or cap them annually

• Insist on clear renewal rights and fair exit clauses

• Clarify who pays for repairs, maintenance, and service charges

• Ensure lease aligns with your business license and zoning

In the competitive market of 2025, thorough due diligence and a well-negotiated contract are essential.

Dispute Resolution in Commercial Lease Agreements

Handling Disputes

While the commercial lease agreement should prevent disputes from arising, Dubai has clear rules and processes in place to resolve rental disputes if they occur. 

In the event of a dispute about commercial lease terms, tenants and landlords can pursue a resolution via:

• The Rental Dispute Center (RDC) in Dubai, which handles landlord-tenant cases

• Civil courts (for higher-value or complex disputes)

• Lease-based clauses allowing alternative dispute resolution methods

When negotiating commercial leases, tenants should include a well-drafted dispute resolution clause which states the remedies for any breaches, such as:

• Early termination

• Compensation mechanisms

• Mediation or arbitration before formal litigation

Proactively planning for the possibility of conflict can reduce costs, delays, and reputational risk.

Conclusion

Understanding the legal and operational intricacies of commercial lease terms is critical to securing a space that supports your business objectives. With rising competition and evolving regulations, partnering with knowledgeable professionals can help you protect your interests while finding the right property.

Are you ready to find the perfect space for your business? Whether you're leasing office space in Business Bay or launching a retail outlet in JBR, Engel & Völkers Commercial offers end-to-end advisory services for commercial leasing in Dubai. Speak to a specialist today.