The United Arab Emirates is becoming a leader in terms of foreign direct investment for business owners. Sectors like real estate, tourism, hospitality, transport, engineering, trade of high-end commodities, and more industries are booming. Many entrepreneurs want to start construction business in Dubai to fulfill the rising demand of infrastructure upgrades in 2024.
UAE’s government is reducing reliability on the petroleum sector, due to decreasing oil reserves in the country. Especially, this decision is a blessing in disguise for Dubai, as the emirate is focusing on development on other industries. Its overall business environment, investor friendly policies, excellent infrastructure, and political stability are transforming the economy.
Together with the UAE, the broad Gulf region provides a great working environment for the foreign investors. Entrepreneurs from around the world are coming to Dubai to avail growing business potential in the UAE. Considering the need of the infrastructure modification, Dubai is witnessing a sharp growth in the construction domain.
Procedure of registering a construction company in Dubai
What is the process to register a construction company in Dubai?
This is the process to start construction business in Dubai.
- Choose legal structure
- Decide a company name
- Select business jurisdiction
- Get initial approval
- Prepare the MoA
- Apply for license
- Register with DCCI
- Lease office space
- Register with Dubai Municipality
- Acquire additional permits
Now, we take a look on this procedure to start construction business in Dubai.
Choose legal structure
Determine the legal structure for your prospective construction company in Dubai. Some options include sole proprietorship, partnership, or limited liability company (LLC). The most preferable choice is LLC, because of its flexibility and protection of personal assets.
Decide a company name
Pick a unique name for your construction company that complies with UAE’s business naming conventions. Make sure that another business entity does not hold the chosen company name in Dubai. Also, ensure that your business name is enticing for the customers as well.
Select business jurisdiction
Pick between mainland Dubai and free zones for registering your construction company. Your choice of jurisdiction should depend on your business requirements. Remember that construction companies in mainland require local sponsor(s), while in free zone they have to follow more restrictions.
Get initial approval
Seek your initial approval from the Department of Economic Development (DED) in Dubai. This approval involves verifying the chosen company name and business activities. Also, your construction business may need additional permits such as signage, environment, health, and safety.
Prepare the MoA
Draft the Memorandum of Association (MOA) that outlines the objectives of your construction company. Ensure your MoA notes down the details of your shareholders and capital structure. Notarize your MoA by a Dubai court or a notary public.
Apply for license
Submit the application for a professional license to the DED to register a construction company in Dubai mainland. Otherwise, you can file the license application with a relevant free zone authority. The professional license enables your company to legally enter contracting bids, and conduct construction activities.
Register with DCCI
Next, you have to register your construction company with the Dubai Chamber of Commerce and Industry (DCCI). It is necessary for obtaining a commercial registration for your construction business. Moreover, it empowers your construction firm to access and provide various business services.
Lease office space
Rent a suitable physical office space for your construction company. The office location must comply with the zoning regulations. Likewise, it must meet the specific requirements set by the mainland or free zone authorities.
Register with Dubai Municipality
The next step is to register your construction company with the building department of the Dubai Municipality (DM). Also known as G+1 permit in the free zones, this registration is essential for receiving necessary permissions for contracting projects. Furthermore, this building permit helps your company in engaging in construction specific activities.
Acquire additional permits
A contracting company has to obtain a civil works permit to undertake construction activities. Also, an environmental license ensures your construction operations meet clean environment regulations. You may need approvals from entities like Roads and Transport Authority or Dubai Electricity and Water Authority.
Other requirements for construction firms in Dubai
Which steps you take after getting construction license in Dubai?
These are the steps you have to follow after obtaining the construction license in Dubai.
- Open corporate bank account
- Find local partner (if necessary)
- Secure the visa (optional)
- File your VAT returns
- Keep compliance and ongoing obligations
Let’s briefly deliberate upon these steps.
Open corporate bank account
Manage the finances of your company by opening a corporate bank account in Dubai. Opt for a reputable bank that offers suitable banking services for businesses. The foreign business owner must hold residency in the UAE for eligibility to open a bank in Dubai.
Find local partner (if necessary)
Consider finding local partner(s), if you are opening a construction company on Dubai mainland. Launching an onshore contracting company in Dubai saves you from the limitations of free zone companies. However, you may have to appoint local sponsor(s) to easily navigate the construction operations on Dubai mainland.
Secure the visa (optional)
In the event, business owners of the construction company are not Emirati citizens. Then, they must apply for the investor visa or the golden card of the UAE. Also, they should apply for the residency visas of their employees, if they don’t have these beforehand.
File your VAT returns
In case, the annual revenue of your construction company exceeds the VAT registration threshold. Then, you must register for Value Added Tax (VAT) with the Federal Tax Authority (FTA) in the UAE. Free zones normally have zero VAT, whereas, mainland require nominal VAT.
Keep compliance and ongoing obligations
Keep your contracting permits active, and renew your professional license on time. Do proper auditing, maintain accounting records, and fulfill tax obligations to remain in good standing with the authorities. Hold continuous compliance with all regulatory requirements like AML/FATF reporting.
Major types of construction services in Dubai
How many types of construction services you can provide in Dubai?
Here are the kinds of services that construction companies can deliver.
- General contracting
- Planning and design
- Project management
- Design-Build
- Architectural design
- Engineering services
- Civil engineering
- Specialized construction
- Site management
- Renovation and remodeling
- Infrastructure development
- Environmental remediation
Next, we briefly discuss these kinds of construction services.
General contracting
Many construction businesses act as general contractors to supervise the overall execution of the projects. Normally, they serve as the main contractor on the construction projects, or prime bidder on construction tenders. They subcontract different parts of the work to other construction firms, while overseeing the overall project execution.
Planning and design
Some construction companies work with architects, engineers, and clients to develop plans and designs for construction projects. It involves conceptualizing the project, creating blueprints, acquiring necessary licenses/permits, and getting regulatory approvals. Also, it covers preparing project budgets, and forecasting implementation timelines.
Project management
Companies doing project management oversee the entire construction timeline, from procurement of materials/equipment to hiring subcontractors, and guiding construction crews. Effective construction management ensures that the project completes on time, within budget, and according to specifications. It includes coordinating subcontractors, managing schedules, resolving conflicts, and maintaining quality control.
Design-Build
Some construction firms provide design-build services, taking responsibility for both the designing and building stages of a project. This comprehensive approach streamlines the project execution and decreases the implementation costs. Also, it improves the collaboration between the designers, engineers, and builders.
Architectural design
A few construction organizations have in-house architects to take care of the project designing. Whereas, others consult or outsource external design firms to develop architectural plans and drawings for construction projects. Architectural design service covers conceptual design, schematic design, design development, and construction documentation, etc.
Engineering services
Many construction companies deliver different kinds of engineering services. For instance, civil engineering, structural engineering, mechanical engineering, soil engineering, mechanical engineering, plumbing engineering, etc. These services make sure that construction projects are built to meet safety, performance, and regulatory requirements.
Civil engineering
A large number of construction companies take part in civil engineering works like developing roads, bridges, dams, and utilities infrastructure. They contribute a major part in planning, designing, and execution of construction and infrastructure building projects. These projects require particular knowledge and expertise in areas like structural engineering, geo-technical engineering, and transportation engineering.
Specialized construction
Some construction firms provide specialized services for specific construction disciplines or trades. It can include concrete work, masonry, carpentry, roofing, plumbing, painting, and finishing work. Also, it may cover utility installations like electrical, solar, generator, or HVAC (heating, ventilation, and air conditioning).
Site management
A few companies provide site management services for coordinating the activities of different workers on the construction place. While ensuring safety compliance, they maintain a clean and organized work environment. They help in worker management for hiring, training, and supervising construction workers with specialties like carpentry, plumbing, and electrical work.
Renovation and remodeling
Construction companies can undertake renovation and remodeling projects to update and improve existing structures. It covers both interior renovations, and exterior renovations. Similarly, it may include structural modifications, and aesthetic enhancements.
Infrastructure development
The large-scale construction firms take part in infrastructure development projects. These projects include roads, bridges, tunnels, railways, airports, seaports, utilities, and other civil engineering works. They support economic growth, connectivity, and mobility within cities and communities.
Environmental remediation
Some special-purpose construction companies provide environmental remediation services. Their offerings include cleaning up contaminated sites and restoring them to safe and usable conditions. The services can involve soil remediation, groundwater remediation, asbestos removal, hazardous waste management, etc.
Dubai departments for special approvals for construction
Which departments in Dubai issue special approvals to construction firms?
Prospective construction companies in Dubai have to attain special approvals from the following government departments.
- Dubai Electricity and Water Authority (DEWA): Clearance from this authority is must, as it provides two basic amenities to Dubai residents
- Building Department of Dubai Municipality: It checks whether the construction company adheres to development regulations
- Drainage Projects Department of Dubai Municipality: It deals with liquid waste management and other disposable services
- Dubai Civil Defence (DCD): It overviews the industrial/commercial safety and public security
Business prospects of construction sector of the UAE
What is business potential of construction in the UAE?
Construction business is one of the most thriving business domain in the UAE. There is a race in the GCC region for skyscrapers, and the United Arab Emirates is clearly ahead of all. Dubai is home to the world’s tallest building Burj Al Khalifa.
The world’s 4th and 5th highest residential buildings Marina 101 and Princess tower are also in Dubai. In fact, Dubai holds 5 of the Top 10 tallest buildings in the world. The UAE houses the second most skyscrapers in the world (14) after the leaders China (50).
UAE’s government is focusing on the up-gradation of civil facilities and transport infrastructure. The UAE has undertaken USD 7.8 billion project of expansion of the Dubai International Airport. In addition, there is a project worth of USD 6.8 billion for the redevelopment of Abu Dhabi international Airport.
To promote business, industry, and tourism in the UAE, the government is taking several unique initiatives. For example, creation of man-made artificial islands such as Palm Jumeirah. Other projects are also under progress; namely Palm Jebel Ali, Deira Island, Maritime City, and many others.
Importance of formation of construction company in Dubai
Why incorporate a construction company in the UAE?
The number of opportunities in the construction sector in Dubai are growing daily. Nowadays, formation of a construction company in Dubai is one of the most profitable ventures. So, you can explore the development of real estate for residential or commercial purpose.
Just in case, you are looking to start construction business in Dubai or the broad UAE. Then, you must first decide whether you want to form a company onshore or in a free zone. Formation of mainland company requires you to have a local partner who will hold company shares.
Whereas, formation of free zone company grants you complete ownership. However, it comes with a few operational limitations in comparison to a mainland company. Whatever, kind of construction company you establish, take into account the provisions of the amended building law of the UAE.
Defining the construction business
What is a construction business?
In a nutshell, a construction business specializes in turning ideas for buildings and structures into reality. Also known as a construction company, it undertakes the planning, design, development, and execution of contracting projects. It employs expert professionals including architects, engineers, project managers, and construction workers, to lead projects from concept to completion.
These projects range from small-scale interior/exterior renovations, building repairs, to large-scale infrastructure developments. For example, buildings, towers, roads, bridges, underpasses, and other civil engineering works. Construction firms vary in size and scope, but their core function is bringing structures to life from the conception.
Overall, construction organizations are shaping the landscapes and communities in which we live, work, and play. Some of them have specialty in making residential homes, high-rise buildings, commercial plazas, or developing transport infrastructure. Whereas, construction corporations provide complete services that handle all aspects of a contracting project from start to finish.
Conclusion
Our experts at KWSME can assist you with company registration, which involves preparation of application form and necessary documents and filing them with the Department of Economic Development (DED) in UAE.
For complete information on how to setup a construction company in UAE, contact our business representatives at KWS ME. We provide complete company formation services for new business setups in Dubai and across UAE. So, feel confident to visit our website today.
