United Arab Emirates: The Importance Of Hiring Property Lawyers For Commercial Development In Dubai

Last Updated: 26 September 2018
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, July 2019

Dubai, as well as other cities within the United Arab Emirates, continues to experience a top growth rate. This is partially due to the increase in businesses from around the world moving into the free zone areas in Dubai and the other emirates. According to a 2018 report by IMD World Competitiveness Centre and the Dubai DED (Department of Economic Development), the emirate is the fastest growing region in the Arab world. It is first in the world for employment growth as well as gross domestic savings as a percentage of Gross Domestic Product or GDP.

With this increased growth in the free zones as well as within the cities in the UAE, there is an ongoing need for commercial and residential construction. These types of developments are complex, usually involving multiple parties as investors, owners, and developers.

Choosing an international law firm with the ability to provide specialized property lawyers familiar with UAE property purchases and development law is essential. These lawyers and their law firms can work with international investors and buyers as well as with national and local developers, investors, contractors, and subcontractors to manage the development process from purchase through to project completion.

Why Legal Assistance is Essential

Foreign buyers and investors in commercial property in Dubai or the rest of the UAE need to work with experienced law firms within the area. Buying property in the UAE can be more complicated and complex than buying property in other areas of the world, and having an experienced lawyer to represent your interests in both the negotiation as well as the development process is essential to avoid making common mistakes and potentially creating legal liability issues.

There are several important aspects of commercial property purchases that buyers should know in advance. For foreign investors, understanding the specific areas in the city or the emirate they can own property is an important first step. A lawyer can pre-select these areas, narrowing down the search and streamlining the process for a foreign buyer.

Documentation is critical for both the buying and rental of commercial property in free zones as well as for mainland properties. A lawyer familiar with the required documentation, including the business license and structure type, can be very helpful in completing an analysis of the benefits of buying or renting in the desired location.

Location is Important

For a business owner with a need to purchase property for development for the business, or for an investor interested in developing a commercial property for sale or lease, being in the right location is an important aspect to consider.

Property lawyers familiar with the trends in the industry throughout the free zones as well as in the mainland business areas are a benefit for a foreign buyer or investor. The lawyer knows the free zones and mainland areas that are booming and those seeing a slower growth rate. Depending on the short and long-term goals for the commercial property, property lawyers can guide the buyer to the best locations.

For example, the faster growth areas, include the free zones such the Dubai Investments Park and JAFZA (Jebel Ali Free Zone) are considered two of the areas with sustained growth that continues to trend upward. While these are areas of rapid growth, they are also areas where commercial property is priced hired due to the demand. Balancing the ideal location with the budget for the purchase can be difficult from a distance, but a property lawyer can represent your interests in narrowing down the property selection.

Understanding the Development Opportunities

Through the services of property lawyers in Dubai with experience in commercial property development, additional factors will also be considered when representing foreign or national clients. This includes understanding the area, including the types of businesses currently surrounding the property and the anticipated changes in the area.

While return on investment or ROI is always an important consideration, zoning, development limitations, and other factors are typically just as critical to consider, and require extensive research and analysis.

Working closely with developers of commercial properties also provides clients with insight into the cost of the rest of the project. After all, the purchase of the property is just the first step. There is also the need to find the best developer, to potentially attract investors to the property and then to coordinate the development process.

The best commercial property law firms can provide the legal support and assistance their clients require. This includes the all-important role of vetting and researching the developers, contractors, and subcontractors as well as negotiating agreements and developing contracts for the project.

Even relatively basic commercial property development, such as warehouses or shell facilities where the leaseholder has the responsibility to develop the interior of the structure need to be coordinated and carefully managed.

Proactive Legal Services

Throughout the development part of any commercial or residential type of construction, the property lawyer and construction and real estate law team are essential in preventing issues before they arise.

Having expertise and experience in this specialised area of law allows the lawyers to anticipate areas of concern. For example, if multiple suppliers are used, including international companies, contacts need to be used that are recognised by the legal system within Dubai as well as the foreign country. These contracts are universally accepted by courts around the world, but they have to be customised to meet the specific requirements of the particular project.

When lawyers representing the buyer or investor are familiar with these international contracts, the best interests of their clients are always included in the terms of the agreement. Having these contracts in place and having the peace of mind they can be enforced in any country necessary is essential in projects where there are multiple parties involved and significant monetary amounts.

Proactive legal services also include risk analysis for the job and ensuring all liability for the investors and developers is clearly outlined. This includes having the correct insurance in place to protect the client from lawsuits in the event of an accident or injury.

Management of Conflicts

It is not uncommon for large commercial projects to have conflicts arise between contractors and subcontractors, contractors and developers, and even the investor group and the developer.

Representation by an experienced property, development and construction lawyer means that the investor has legal representation in Dubai to address these conflicts as they occur. In many cases, the lawyer can anticipate potential issues and address these potential issues of conflict very early in the discussions, eliminating the risk of issues suddenly derailing a project or resulting in delays.

Often, conflicts can be easily resolved early in the disagreement through direct negotiations. With a Dubai-based law firm available to negotiate on behalf of a foreign investor, time, money and frustration for all parties can be avoided. Additionally, with a top reputation in the commercial development industry, these law firms are seen as trusted representatives with the ability to negotiate even complex, multi-party types of agreements to the satisfaction of all involved.

The best law firms also work with the buyer or investor in the ongoing management of the developed property as well. They can create the ideal contacts and lease agreements, manage any legal issues involving the property and even assist the investor should he or she decide to sell.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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