The starting point for any Dubai lease, commercial or residential, is Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, as amended by Law No. 33 of 2008. The law applies to leased land and property across Dubai irrespective of its permitted use — offices, retail units, warehouses and residential units are all covered by the same base statute, with only narrow carve-outs such as free employee accommodation provided without charge.
Two further instruments sit alongside it. Decree No. 43 of 2013 sets tiered caps on rent increases at renewal, benchmarked against RERA's Rent Index; it applies broadly to landlords across Dubai, including free zones, though whether it is applied to commercial leases in the same way as residential ones is not fully settled, and most commercial leases fix their own escalation mechanism by contract regardless. Decree No. 26 of 2013 established the Rental Disputes Settlement Centre, which hears rent, eviction and service-charge disputes for both commercial and residential tenancies. The Dubai International Financial Centre operates its own separate leasing regime for property within the DIFC itself, distinct from the mainland framework described here — covered in more detail in Mitchell's Commercial Real Estate's guide to investing in Dubai offices.
Most Dubai office, industrial and standalone retail leases use a fixed base rent, quoted as an annual rate per square foot and typically paid in a small number of instalments across the year rather than monthly. Some leases are structured on a gross basis intended to cover most operating costs, while others allocate certain costs — service charge, insurance, maintenance — separately to the tenant in a more triple-net-style arrangement. Which basis applies is a matter of contract, so the allocation of costs should always be checked line by line rather than assumed from the headline rent.
Mall and shopping-centre retail more commonly uses a base (minimum guaranteed) rent plus a percentage of the tenant's gross turnover once sales pass an agreed threshold, known as the breakpoint. Landlords typically benchmark this structure against an occupancy cost ratio — rent as a proportion of tenant turnover — to judge whether the arrangement remains commercially sustainable for the tenant across the lease term. Mitchell's Commercial Real Estate's guide to investing in Dubai retail sets out the turnover-rent and occupancy-cost-ratio mechanics in more depth.
In every structure, base rent is typically quoted exclusive of service charges, chiller or district cooling fees, and the 5% VAT chargeable on commercial rent under Federal Decree-Law No. 8 of 2017 — all of which should be added to the headline figure to reach the tenant's true occupancy cost.
Corporate office and industrial leases in Dubai are commonly negotiated for a three- to five-year term, with longer terms for larger anchor tenants and shorter terms for smaller retail or flexible-use units. A rent-free or reduced-rent fit-out period is standard practice rather than the exception — commonly cited in a one- to six-month range depending on the scale of the tenant's fit-out works, with more extensive fit-outs (a flagship retail unit or an F&B outlet) typically toward the longer end. A security deposit, commonly cited around 5-10% of annual rent, is standard practice, held against damage and unpaid amounts and returned, subject to deductions, at lease end.
Fit-out itself is rarely a simple handover. Al Tamimi & Company's commentary on commercial leasing in Dubai notes that fit-out works can involve complex construction arrangements with obligations on both sides, and that disputes can arise over responsibility for delays — landlords commonly require the tenant to hold construction-related insurance, such as builder's risk cover, that also benefits the landlord during the works. At lease end, tenants are typically required to reinstate the space to its original "shell and core" condition unless the landlord agrees otherwise, an obligation that should be defined precisely in the lease rather than left to later negotiation.
Dubai commercial leases commonly fix rent escalation by contract at signing, most often as a fixed annual percentage increase, sometimes with rent held flat for an initial period before a step-up, and less commonly linked to a cost-of-living index or a periodic market-rent review. Fixing the mechanism up front gives both sides certainty over the lease term and reduces reliance on any external index.
This matters because it is genuinely unclear whether Decree No. 43 of 2013's rent-increase cap — the mechanism widely known through Dubai's Smart Rental (Rent) Index — applies to commercial leases in the same way it applies to residential renewals. The decree's own text extends broadly to landlords across the Emirate, including free zones such as the DIFC, but commercial rent reviews are, in practice, generally governed by whatever escalation clause the parties agreed at signing. An investor-landlord and a tenant should each treat the lease's own escalation clause, not an assumed statutory cap, as the operative mechanism, and take specific legal advice if a dispute arises. Mitchell's Commercial Real Estate's guide to the Smart Rental Index covers the residential mechanism in full.
No. A right to terminate a Dubai commercial lease early is not implied by law and exists only where it has been expressly negotiated and drafted into the contract. Where a break option is agreed, a typical structure — illustrated in West Gate Real Estate's commentary on Dubai office leases — combines an initial lock-in period (for example, no break in the first twelve months), a minimum written-notice requirement of a few months, and a financial penalty commonly cited around two months' rent. These figures illustrate one commonly seen structure rather than a fixed market standard, and the actual terms of any given lease should always be checked directly.
Separately from a negotiated break right, Dubai's tenancy law provides that a lease generally continues on similar terms if neither side gives notice of non-renewal — commentary from Al Tamimi & Company treats this as a matter of public policy that cannot simply be contracted away. Landlords seeking to end a tenancy on a statutory ground, rather than by mutual non-renewal, face materially longer notice requirements — typically around twelve months, served through notary or registered mail — a different and more restrictive process, covered in Mitchell's Commercial Real Estate's guide to eviction rules and notice periods.
Ejari is the Dubai Land Department and RERA's mandatory tenancy registration system, and every Dubai lease — commercial and residential alike — must be registered through it. The obligation is statutory: Article 4(2) of Law No. 26 of 2007, as replaced by Law No. 33 of 2008, provides that all lease contracts related to real property governed by that law, and any amendments to them, will be registered with RERA. Dubai Land Department's own EJARI tenancy guide states the same in plain terms — registration of tenancy contracts through EJARI is mandatory. Neither instrument sets a deadline for doing it, and neither names the party who must; the tenancy guide places the undertaking to authenticate the contract at RERA on the landlord for each contract, new or renewal, and sets out a separate document list for the case where the lessor does not register and registration proceeds through the tenant instead. Free zones such as the DIFC, DMCC and JAFZA generally operate their own separate lease-registration arrangements rather than mainland Ejari, so the applicable system should be confirmed for any free-zone unit.
For a commercial tenant, Ejari's importance extends well past the lease itself. A valid, current Ejari registration is generally required before the Dubai Department of Economy and Tourism (DET) will issue or renew a mainland trade licence at that business address, and a lapsed or unregistered Ejari can hold up a licence renewal entirely. Both sides have an interest in keeping it up to date — a landlord who delays cooperating with re-registration at renewal can, in effect, put a tenant's licence at risk.
One consequence that is very widely asserted does not hold up against the text in force, and it is worth stating plainly because acting on it could cost a party its negotiating position. You will read in a great many places that a court or the Rental Disputes Settlement Centre cannot hear a claim on an unregistered lease. That sentence — "Judicial authorities and Government departments, authorities, and corporations may not consider any dispute or claim or otherwise take any action relating to a Lease Contract unless such Contract is registered with RERA" — was in the 2007 original Article 4. Law No. 33 of 2008 replaced Article 4 with effect from 1 December 2008, and the replacement carries the registration requirement without that consequence. Article 6 of Decree No. 26 of 2013, which establishes the Centre and defines its jurisdiction, removes jurisdiction in three cases only — disputes inside free zones with their own tribunals, disputes from a lease finance contract, and disputes from long-term leases under Law No. 7 of 2006 — and registration with RERA is not among them.
That does not make registration optional, and it does not mean an unregistered lease is a comfortable place to be. Registration remains a statutory obligation, DLD's tenancy guide puts registering the lease contract as the first step where a dispute arises between lessor and tenant, and the Centre asks for the tenancy contract among the documents required to file. What we do not do here is convert those facts into a jurisdictional bar the current legislation no longer contains. If a landlord, agent or adviser tells you an unregistered lease is unenforceable, ask them which provision in force says so — and if the point actually matters to a live dispute, confirm it with the Rental Disputes Settlement Centre or a UAE-qualified lawyer rather than relying on any guide, this one included. The full amendment history is set out in RERA, Ejari and Oqood explained.
- Tenant covenant strength and trade licence match. Confirm the tenant's trade licence activity matches the permitted use in the lease, and assess the tenant's financial standing relative to the rent committed.
- Reinstatement and fit-out obligations. Define the "shell and core" condition precisely, and confirm insurance is in place during any tenant fit-out works.
- Service charge and demise definitions. Al Tamimi & Company's commentary stresses that a clearly defined demise is critical to determining exactly what is covered by service charge and general maintenance obligations — ambiguity here is a common source of later disputes.
- Assignment and sub-letting rights. Confirm consent rights over any assignment, sub-letting or change of use during the term.
- Break and renewal exposure. Understand how any break clause or renewal right affects the income security, and therefore the value, of the asset, particularly ahead of a future sale or refinancing.
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- What is actually included in the quoted rent. Confirm whether service charge, chiller/cooling fees and VAT are included in or added to the headline rent before comparing offers.
- The escalation mechanism. Fixed percentage, CPI-linked or market-review — and whether it is capped — should be clear and agreed before signing, not left to a future review.
- Ejari and licensing timing. Confirm the landlord will cooperate promptly with Ejari registration and renewal, since a lapsed registration can directly delay a trade licence renewal.
- Break rights, or the lack of them. If no break clause exists, treat the lease as a fixed commitment for its full term when assessing affordability; if one exists, confirm the exact notice period and penalty.
- Fit-out approvals. Specialist fit-outs — an F&B unit, for example — commonly require additional external approvals (Dubai Civil Defence and the Dubai Municipality Food Control Department among them), which take time and should be budgeted into the fit-out period.
Commercial lease disputes in Dubai — over rent, eviction or service charge — are heard by the Rental Disputes Settlement Centre, established under Decree No. 26 of 2013, rather than by the ordinary civil courts, and this jurisdiction extends to commercial tenancies within the DIFC as well as the wider mainland. Keep the Ejari registration current throughout the tenancy: the Centre's document list for a filing includes the tenancy contract, and registration is in any event a statutory obligation — but note the point made above, that Article 6 of Decree No. 26 of 2013 does not itself make registration a condition of the Centre's jurisdiction. Mitchell's Commercial Real Estate's guide to rental disputes and the RDC sets out filing fees, process and eviction grounds in full.
Mitchell's Commercial Real Estate works with commercial investor-landlords and, where relevant, their tenants to structure Dubai leases that hold up in practice — clarifying which lease structure fits the asset, negotiating escalation and break terms, and making sure Ejari registration and trade-licence timing do not become a source of avoidable friction. If you are negotiating a new commercial lease, renewing an existing one, or assessing how a lease's terms affect the value of a property you are looking to buy or sell, get in touch before you commit.
This guide is provided for general information only and is not legal, tax or investment advice. Lease conventions, decree provisions and market practice change; always confirm current terms directly with a UAE-qualified lawyer and review the specific contract before acting.
In closing
Key Takeaways
- Dubai has two dominant commercial lease structures. Offices, industrial space and standalone retail units are typically let on a fixed base rent, while mall and shopping-centre retail commonly combines a base rent with a percentage of the tenant's turnover once sales pass an agreed threshold.
- The same core law applies across asset types. Law No. 26 of 2007, as amended by Law No. 33 of 2008, regulates the landlord-tenant relationship for all leased property in Dubai regardless of use — residential, commercial or industrial — with only narrow exceptions.
- Lease terms and fit-out periods follow convention, not statute. Corporate office and industrial leases are commonly negotiated for three to five years, with a rent-free or reduced-rent fit-out period — commonly one to six months depending on the scope of works — agreed case by case.
- Break clauses are not automatic. Unlike some jurisdictions, Dubai's tenancy law does not imply a right to terminate early — a break option only exists if it is expressly negotiated and drafted into the lease, typically alongside a minimum notice period and a financial penalty.
- Ejari registration is mandatory and has consequences beyond the lease. Every Dubai tenancy, commercial included, must be registered with RERA under Article 4(2) of Law No. 26 of 2007 as replaced by Law No. 33 of 2008, and a valid registration is generally required for a mainland trade licence renewal. Whether it is also a legal precondition to filing at the Rental Disputes Settlement Centre is not settled — the statutory bar most sources quote was removed in 2008 and does not appear in the text in force.
- Rent escalation is set by contract, not by a single fixed formula. Fixed annual percentage increases are most common, sometimes alongside a periodic market-rent review; whether the residential-oriented Smart Rental Index cap applies to commercial leases in the same way is not conclusively settled.
- Landlords and tenants should check different things before signing. A landlord's priorities centre on covenant strength and reinstatement obligations; a tenant's centre on what is actually included in base rent and what rights exist to exit or renew.
This guide sets out how commercial leases are actually structured in Dubai — lease types, typical terms, rent-free periods, escalation and break clauses — together with Ejari registration and what an investor-landlord and a tenant should each check before signing. It focuses on general commercial leasing practice across office, retail and industrial space; sector-specific detail on retail turnover-rent mechanics and industrial cost allocation is covered in more depth in Mitchell's Commercial Real Estate's dedicated retail and warehouse guides. This is general information as of July 2026, not legal advice.
Frequently asked questions
0601Are break clauses standard in Dubai commercial leases?
No. A break option is not implied by Dubai's tenancy law and will not exist unless it is expressly drafted into the lease. Where a break clause is negotiated, it commonly combines an initial lock-in period, a minimum written-notice requirement and a financial penalty — the specific structure varies by negotiation and should always be checked in the contract itself rather than assumed.
02What is a typical commercial lease term in Dubai, and is there a rent-free period?
Corporate office and industrial leases are commonly negotiated for three to five years, with retail lease terms varying more by unit size and tenant type. A rent-free or reduced-rent fit-out period is standard practice rather than the exception — commonly cited in a one- to six-month range depending on the scale of the tenant's fit-out works, agreed case by case rather than fixed by law.
03Does Ejari registration matter beyond the lease itself?
Yes, though not for the reason most guides give. Registration is a statutory obligation in its own right: Article 4(2) of Law No. 26 of 2007, as replaced by Law No. 33 of 2008, requires all lease contracts governed by that law to be registered with RERA. Beyond that, a valid, current Ejari registration is generally required before the Dubai Department of Economy and Tourism (DET) will issue or renew a mainland trade licence at that address, so a lapsed registration can disrupt licensing. What we do not state is that an unregistered lease bars you from the Rental Disputes Settlement Centre. The sentence preventing judicial authorities and government departments from acting on an unregistered lease sat in the 2007 original Article 4; the replacement enacted by Law No. 33 of 2008 does not carry it, and Article 6 of Decree No. 26 of 2013, which fixes the Centre's jurisdiction, imposes no registration condition. The Centre does ask for the tenancy contract among its filing documents, so keep the registration current regardless — but confirm the filing position with the RDC or DLD rather than treating a statutory bar as settled.
04How does turnover or percentage rent work in a Dubai retail lease?
A turnover (or percentage) rent structure combines a base rent with an additional percentage of the tenant's gross sales once turnover passes an agreed threshold, known as the breakpoint. Landlords typically benchmark the arrangement against an occupancy cost ratio — rent as a share of tenant turnover — to judge whether the deal remains sustainable for the tenant over the lease term. Mitchell's Commercial Real Estate's dedicated retail investment guide covers this mechanism in more depth.
05Does Dubai's rent-increase cap (the Smart Rental Index) apply to commercial leases?
This is not fully settled. Decree No. 43 of 2013 sets tiered rent-increase caps by reference to the RERA Rent Index and, on its face, applies broadly to landlords across Dubai, including Special Development Zones and free zones. In practice, most commercial leases fix their own escalation mechanism by contract at signing, which reduces reliance on the index either way — but a definitive, commercial-specific reading of the decree's scope should be confirmed with a qualified UAE lawyer for any specific dispute.
06Who resolves a commercial lease dispute in Dubai?
Rent, eviction and service-charge disputes on Dubai commercial tenancies — including those in the DIFC — are heard by the Rental Disputes Settlement Centre established under Decree No. 26 of 2013, rather than by the ordinary civil courts. Keep the Ejari registration current: the Centre's document list for a filing includes the tenancy contract, although Article 6 of that Decree does not itself impose registration as a condition of its jurisdiction. Mitchell's Commercial Real Estate's dedicated guide to the RDC covers filing fees, process and eviction grounds in full.
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Updated 8 September 2026 by Mitchell's Commercial Real Estate. Market figures quoted reflect the data available at that date.
