Rent or buy office space? Ask the Expert

Rent or BuyMohanad Alwadiya

Does it make better economic sense to purchase instead of renting office space?

We have advocated for several years now that, cash flow permitting, businesses acquire their own premises. If you are a business committed to operating long term in Dubai, it makes sense to own office space, particularly if it is a well-negotiated purchase. There is no tax advantage in leasing in Dubai and, as long as your office space is appreciating, your balance sheet will look a whole lot better and grow stronger over time.

When it comes to office space, there are still some excellent deals to be had, but as Dubai’s economy continues to grow, they are getting harder to find.

Office space is still relatively cheap in Dubai and with a high, albeit shrinking, vacancy rate of around 24 per cent, there are definitely opportunities for value purchases. However, there is already a relative shortage of Grade A single-owner space with a large floor plate. This type of space is favoured by larger companies, often multinationals, and represents strong investment potential.

As Dubai seeks to grow economically, readily available office space is one of the important factors that new enterprises will consider. In this regard, any investment a business makes in owning its own office space should see good capital growth going forward.

I sent my tenant a couriered notice to vacate the property within one year. He said it is not valid. Is there a format or any other formalities for this?

You need a valid reason for requesting the tenant to vacate the premises.

If your tenant is in breach of the tenancy agreement or has broken the law, you must serve a 30-day notary public notice to the tenant. The notice must clearly state why the tenant is being given a 30-day notice. If the tenant does not respond to the request, then the landlord can go to the Rental Dispute Settlement Centre and request an eviction order.

If you want to sell the property or use it yourself, you will need to provide a 12-month notice through the notary public stating your intentions. You can then refuse to renew any lease for a period that extends more than 12 months past the date of notification.

Keep record of the delivery report as evidence of receipt by the tenant.

Sourcce: Mohanad Alwadiya
Managing Director of Harbor Real Estate and advisory board member and instructor at the Dubai Real Estate Institute, the official training and certification arm of the Dubai Land Department.

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