Commercial Property for Sale in Dubai: Yields, VAT and the Tenant Risk

Dubai sold AED 13.1 billion of offices in 2025, double the year before and the strongest year since 2014, at an average AED 1,951 per sq ft. Occupancy sits near 94%, and Business Bay alone took 1,230 ready office sales. Against a flat, an office carries 5% VAT and one tenant who can leave a bigger hole.

Foreigners buy freehold in the same designated areas as apartments, from Business Bay and JLT to Dubai South (foreign ownership guide), with DIFC on its own register under DIFC Law No. 10 of 2018. Outside them a non-GCC buyer gets at most a 99-year leasehold, so ask for the title deed.

Key Takeaways

• Foreigners buy offices and shops freehold in the designated areas; DIFC has its own register.
• The market is tight: 94% occupancy, rents up 13% to Q2 2026, Business Bay Grade A vacancy under 5%, JLT 1,067 ready sales in 2025.
• VAT is the extra line: 5% on a commercial sale and on rent, where residential is exempt; registered buyers recover it.
• Prices vary: AED 1,200–1,800 per sq ft in Business Bay, AED 1,300 in JLT, AED 7,040 for the Opus record.
• Net yields are close: our 1,000 sq ft example nets 5.3% against 5.2% for a one-bed, and the cons are real: long voids, dated fit-out, one tenant, a Grade B glut.

The office market as of mid-2026

CBRE's Q2 2026 review put rents up 13% year on year, prime up 16%, occupancy near 94%. Savills recorded rents flat at AED 238 per sq ft in Q2, the first quarter without growth since 2021, on Grade A scarcity rather than weak demand; Cavendish Maxwell recorded 2025 rents up 23% on average, 35% in DIFC. Bands disagree between sources: fitted and shell space in one district run 100% apart, and the sale prices below are listing-derived, not transaction averages.

The top end runs far higher: 2,879 sq ft in The Opus sold in September 2024 for AED 20.26 million, AED 7,040 per sq ft, a DLD record.

The fee stack, and the VAT line apartments never see

The DLD side matches a residential purchase: 4% transfer fee, AED 580 admin, trustee about AED 4,200 plus VAT, title deed and map about AED 500, 2% agency plus VAT, all in our cost guide.

Then the difference: under UAE VAT law a commercial sale is standard-rated at 5%, where a residential sale is exempt and the first supply of a new home within three years of completion is zero-rated. The buyer pays that 5% on top, usually direct to the Federal Tax Authority, showing the payment reference before the DLD registers the transfer.

Whether the 5% is a cost or a timing issue depends on recovery. Commercial rent is standard-rated too, so a landlord above the AED 375,000 mandatory registration threshold, or voluntarily registered above AED 187,500, makes taxable supplies and can generally recover the input VAT. It needs a valid tax invoice and taxable use, which the FTA monitors for ten years, clawing back if that changes; an unregistered buyer loses the 5%. VAT is the one tax Dubai does levy on a commercial investor, as the property tax guide sets out.

Service charges and the shell-and-core trap

Office service charges run AED 13–18 per sq ft in mid-market Business Bay and JLT towers, AED 18–35 in Grade A buildings with chilled water bundled in, a wider band than apartment charges, so check the DLD-approved budget.

Shell-and-core units are bare slab: no ceiling, no partitions, sometimes no air-conditioning termination. Fit-out runs AED 200–400 per sq ft for a light Category A finish, AED 400–700 for Category B and AED 700–1,200 plus for premium work, with Business Bay and JLT jobs typically AED 450–800, or AED 450,000–800,000 on 1,000 sq ft before you have a tenant. A fitted office priced AED 300 per sq ft above a shell unit is therefore cheap, if the fit-out suits the next tenant.

Leases: how an office tenancy differs

Commercial leases register on Ejari under Law 26 of 2007 as amended by Law 33 of 2008, but Decree 43 of 2013 caps renewals through the DLD calculator's commercial categories, rent carries 5% VAT that the tenant pays and you remit, and a tenant who leaves the unit empty for 30 consecutive days, or 90 days in a year, can be evicted mid-term, which residential law does not allow. An owner reclaiming an office for personal use cannot re-let for three years, against two for a home; our landlord guide covers the Rental Dispute Centre process.

Corporate tax: is a rented office a business?

The UAE charges 9% corporate tax on profits above AED 375,000. Cabinet Decision 49 of 2023 says a natural person's income from selling, leasing or renting UAE real estate is not a Business, provided it needs no licence from a licensing authority. One or two offices in your own name therefore sit outside the tax; hold them through a UAE company and the rental profit is taxable at 9%. A portfolio that looks like a licensed leasing operation loses that exclusion; the structure moves the after-tax yield by a full point.

Run it on your own numbers. Set the price, the rent and the service charge and the calculator gives you the fees, the cash you need on day one and what the rent leaves after costs — in your own currency.

A worked example: an office against a one-bed

The calculator above uses the residential fee schedule and does not add the 5% VAT: run your office through it, then add 5% of the price to the one-time costs:

A 1,000 sq ft fitted Grade B office in Business Bay at AED 1,800 per sq ft costs AED 1,800,000. VAT at 5% is AED 90,000, DLD 4% plus admin AED 72,580, trustee AED 4,410, title deed AED 500, agency 2% plus VAT AED 37,800: outlay AED 2,005,290, 11.4% above the price. Let it fitted at AED 140 per sq ft, inside the AED 90–160 band, for AED 140,000 rent, a 7.8% gross yield. Less service charge at AED 22 per sq ft (AED 22,000) and 8% for voids and management (AED 11,200), net rent is AED 106,800: a 5.3% net yield on outlay, or 5.6% if you recover the AED 90,000 VAT and outlay falls to AED 1,915,290.

The one-bed: AED 1,800,000 in Business Bay buys about 800 sq ft at 7% gross, AED 126,000 rent. With no VAT, fees are AED 115,290 and outlay AED 1,915,290; less AED 14,400 of service charge and AED 12,600 for voids and management at 10%, net rent is AED 99,000, a 5.2% net yield.

The office wins by a tenth of a point unregistered, four-tenths registered, against one tenant, a longer void and fit-out that dates: the gap on headline yields is two points, on net cash it is small. JLT at AED 1,300 per sq ft pushes yields toward 6–7%.

Office, shop or apartment

Retail here means podium and community space, not mall units, which operators keep and lease: sales jumped 177% to AED 3.8 billion in the first half of 2026 across 850 transactions, led by JVC, and such a shop lives on footfall you do not control. A DLD-deeded office or shop worth AED 2 million may also support the property visa, though guides disagree and DIFC units have no DLD deed.

The honest cons

• Voids are long. A flat re-lets in weeks, an office in a quarter or more, a shop longer.
• Fit-out dates. AED 500,000 of fit-out has a ten-year life and the next tenant may rip it out.
• One tenant. A default stops all income until the Rental Dispute Centre process ends.
• Resale is thin. Only investors buy offices, so exits take longer and discounts run wider.
• VAT cash flow. Even when recoverable, 5% sits with the FTA until your return is processed.
• Grade B glut. Business Bay has dozens of older towers with poor parking, slow lifts and awkward floor plates. Grade A is scarce, Grade B is not, and about 24 million sq ft of new space is due citywide between 2026 and 2030.

Indian buyers use the same LRS route as for a flat: USD 250,000 a year, 20% TCS above INR 10 lakh, and Schedule FA disclosure with an INR 10 lakh annual penalty for missing it, as our India buyer's guide sets out.

Frequently asked questions

Can a foreigner buy an office in Dubai outright?

Yes, freehold, in the designated areas such as Business Bay, JLT, Barsha Heights, Silicon Oasis, Motor City, JVC, Dubai South, Production City and Dubai Investments Park. DIFC offices are freehold too but registered with the DIFC's own registrar rather than the DLD.

Is there VAT when you buy commercial property in Dubai?

Yes. A commercial sale is standard-rated at 5%, paid by the buyer, usually straight to the Federal Tax Authority before the DLD transfer. A VAT-registered buyer letting at taxable rent can generally recover it; an unregistered buyer cannot.

What yield does a Dubai office give compared with an apartment?

Gross yields of 7–9% on strata offices against 6–8% on apartments. After VAT, service charges, voids and fees the net gap narrows to under a point in Business Bay, widening to a point or two in cheaper districts like JLT.

Does a commercial property qualify for the Dubai Golden Visa?

Most brokerages report that a freehold office or shop on a DLD title deed worth AED 2 million qualifies, but some guides disagree and DIFC units have no DLD deed. Confirm your unit with the DLD before relying on it.

Will I pay UAE corporate tax on office rent?

Not if you hold it personally and the letting needs no trade licence: Cabinet Decision 49 of 2023 excludes that income from the 9% tax. A company holding the same office pays 9% on profit above AED 375,000.

Send us the tower and floor and we will pull the last twelve months of DLD sales there, the approved service charge budget and what fitted space on the floor plate lets for.