Dubai is all about construction. The skyline attests to that, famous for boasting at least one-fifth of the world’s cranes. Over the decades, the city has transformed from a small trading port into the humming metropolis we know today. And it is largely the construction sector that has been behind this incredible change. From the Burj Khalifa to the Palm Jumeirah, Dubai is all about pushing architectural and engineering boundaries.
If we drill down a bit more, we find the construction industry in Dubai essentially spans residential, commercial and infrastructural projects. These include everything from luxury residential communities and the emirate’s world-famous shopping malls, to modern office buildings and top-tier hotels. This is driven heavily by an expatriate workforce, ranging from skilled engineers and architects to labourers.
In addition, Dubai is also at the forefront of the latest technological developments in the construction industry, including the use of cutting-edge processes such as 3D printing, sustainable building practices and smart city projects. This emphasis on green buildings and sustainable practices means that many projects are aiming for LEED certification (Leadership in Energy and Environmental Design), the world’s premier green building rating system.
So, in this article we’ll look at how to start a construction business in Dubai and consider the benefits, costs, and types of licenses on offer.
Starting a construction business in Dubai
To start a construction business in Dubai, you need to follow a series of steps, from business planning to registration and ensuring compliance with local regulations. Here’s a step-by-step guide to assist you in the process:
Step 1: Choose the appropriate legal structure for your business: To establish a construction company in Dubai, setting up on the mainland is the ideal choice. Mainland companies are governed by UAE laws and regulations.
Step 2: Register your trade name and obtain a construction license: You can register your trade name with the Department of Economic Development (DED). The name must be unique and non-offensive. Additionally, you need to apply for initial approval from the DED by submitting a completed application form along with other documents, such as a copy of your passport and a business plan. The construction industry falls under the commercial sector, necessitating a commercial license to operate in Dubai. We will look at the various types of license that sit within ‘commercial’ later in this article.
Step 3: Secure additional government approvals: For mainland companies, additional permits include obtaining a building license from the Dubai Municipality. Other licenses might include environmental permits and civil work permits.
Step 4: Open a corporate bank account: After acquiring your construction license in Dubai, you can open a corporate bank account. This is essential for receiving client payments and paying your suppliers.
Step 5: Build your team: Hire skilled professionals and labourers for your projects. Provide necessary training and ensure your team is well-equipped to manage construction tasks efficiently and safely.
Step 6: Handle visa and labour requirements: Obtain sponsorship and residence visas for yourself and any foreign employees. Comply with UAE labour laws, including those related to hiring practices, wages, and working conditions.
Benefits of starting a construction business in Dubai
Starting a construction business in Dubai offers numerous advantages:
- Increased opportunities: The UAE government is actively diversifying the economy through various initiatives aiming to attract foreign investments. These strategies, aimed at boosting the non-oil sectors – whether it’s education, events, tourism, tech, infrastructure development, or the push to make Dubai the best place to live in the world – all contribute to a positive outlook for the construction industry.
- Low construction costs: Economic diversification has led to reduced construction costs in Dubai, compared to other developed cities. This reduction is driven by increased competition within the construction sector and low labour wages.
- Available labour: Labour availability is crucial for construction projects. Despite a global shortage of skilled labour, the UAE offers a plentiful supply at lower wages, making it an attractive location for construction businesses.
- Easy availability of licenses and permits: Obtaining necessary permits and licenses for construction in Dubai has become simpler. The government is continually streamlining processes for securing government approvals as a way of attracting visitors and investors.
Types of construction licenses in Dubai
There are four main types of construction licenses in Dubai. Let’s look at these now:
- Building contracting license: This license allows companies to engage in constructing residential, commercial, and industrial buildings. Activities include:
- Constructing high-rise buildings, villas, and apartment complexes
- Developing commercial projects like malls and office buildings
- Building industrial facilities such as warehouses and factories
- Wrecking and demolition license: A wrecking and demolition license is required for companies specialising in dismantling and demolishing structures. This license covers:
- Demolition of old or unsafe buildings
- Controlled demolition to ensure safety and minimise environmental impact
- Removal and disposal of debris following demolition
- Steel constructions contracting license: This license allows companies to work on projects involving steel structures, including:
- Fabrication and erection of steel frameworks for buildings, bridges, and other structures
- Installation of steel components in various projects
- Maintenance and repair of steel structures
- Building maintenance license: A building maintenance license is necessary for businesses providing upkeep and repair services for existing structures. This includes:
- Routine maintenance activities such as painting, plumbing, and electrical work
- Repair and renovation work to preserve buildings
- Ensuring buildings meet health and safety standards through regular inspections
How much does it cost to start a construction business in Dubai?
The cost of starting a construction business in Dubai starts at around AED 12,500. This initial expense covers the basic setup procedures, including trade name registration and obtaining a commercial license. However, there are additional costs that you need to consider based on specific business needs.
Visa requirements can influence the overall cost. Entrepreneurs and their employees must secure visas, which entails government fees and other related expenses. The number of visas required will depend on the size and scope of your business.
It’s important to note that certain construction activities necessitate additional approvals from government entities. For instance, building permits, environmental clearances, and other specific licenses might be required depending on the nature of your projects. Each of these approvals involves separate fees and compliance costs.
Given the complexity of these expenses, it’s advisable to seek professional assistance to get an accurate estimate. Unity Partners can provide detailed information and guidance tailored to your business needs, ensuring you understand all potential costs and requirements.
Why work with Unity Partners?
When you’re considering setting up a construction company in Dubai, there’s a lot to think about. From completing the initial application to obtaining the necessary approvals, every step must be meticulously followed to meet the requirements set by the authorities.
Unity Partners is a global network of industry specialists dedicated to offering personalised services and solutions, assisting entrepreneurs in establishing and growing their businesses in the UAE. We are experts in navigating the complexities of the licensing process, ensuring that every step, from identifying your business activity to gathering the necessary documents, is handled efficiently and accurately.
Unity Partners’ comprehensive understanding of local regulations and our relationships with key government entities help streamline the approval process, saving you time and reducing potential obstacles. From company formation to legal support, Unity Partners is with you every step of the way. Your success story starts today. Contact us for a free consultation.