Dubai Investment Park: how letting commercial property differs from letting a home

In mixed-use zones a private buyer can purchase not only apartments but also offices, warehouses and retail units. That is a different market, and the habits of residential letting do not carry over.

Five differences

• Leases are longer. A business is tied to its address by its licence, its equipment and its customers; moving out is harder for it than for a household.
• The tenant invests. Fit-out and equipment are usually at the tenant’s expense, which also keeps them in place.
• Shell-and-core handover is the norm. Offices and warehouses are often let without final finishes, which affects both the time to let and the pool of tenants.
• Voids are longer. Finding a tenant for a specific type of space takes longer than letting an apartment — the main risk of the segment.
• Rent is quoted per unit of area, and the market is more transparent: prices for comparable space diverge less than for apartments.

What to check in the unit

• Permitted use — it decides whom you are allowed to let to.
• Electrical capacity and ventilation — for many tenants these are deal-breakers.
• Access, loading and parking for customers and staff.
• How common-area costs are split between the residential and non-residential parts of the complex.

What to check in the numbers

• Rents and time on market for comparable units in the same zone.
• The share of vacant space around you — more honest than any forecast.
• Access to finance: commercial property is financed differently, and some banks will not lend on it.
• Liquidity on exit — the pool of buyers is narrower than for residential.

Based on Dubai’s land-use zoning and common practice in the commercial property market.