Commercial Mortgages in Dubai: How to Finance Offices, Retail, and Investment Properties

Whether you're acquiring a warehouse for your logistics business, investing in a retail space, or financing an office tower—commercial mortgages in Dubai provide a powerful way to scale your portfolio or expand your operations.

Unlike residential loans, commercial mortgage approvals are driven primarily by the income potential of the asset—measured through rental yields and capitalization rates. As a result, understanding how banks assess commercial value is essential before you apply.

In this guide, I’ll walk you through the full process of securing a commercial mortgage in Dubai, including prevailing rates, eligibility criteria, valuation methodology, required documents, and the costs involved.

You can also use my free mortgage calculator to model various loan scenarios.

Why Consider a Commercial Mortgage in Dubai?

Dubai is home to one of the most dynamic commercial real estate markets in the world. With tax-free rental income, high demand in free zones, and a maturing legal framework, it has become an attractive location for business owners and investors alike.

Top reasons to use a commercial mortgage:

✔ Preserve capital by spreading cost over time

✔ Leverage income-generating assets

✔ Hedge against inflation with rental growth

✔ Take advantage of historically low interest rates

✔ Consolidate or refinance existing commercial debt

What Qualifies as a Commercial Mortgage?

Commercial mortgages in Dubai apply to any property that is used primarily for business or investment purposes, including:

• Offices

• Retail shops

• Restaurants and cafes

• Warehouses and industrial units

• Commercial floors in mixed-use buildings

• Purpose-built medical or educational units

These loans are typically offered to businesses, investors, or SPVs (Special Purpose Vehicles) and may be secured in either an individual or company name, depending on the structure.

How Are Commercial Properties Valued in Dubai?

Unlike residential mortgages, commercial valuations aren’t based on comparable sales or market sentiment—they’re based on rental yield and capitalization rates.

Capitalization Rate (Cap Rate):

The cap rate reflects the expected return on a commercial asset and is used to calculate its market value.

Valuation Formula:

Commercial Property Value = Annual Net Rental Income / Cap Rate

Example:If your retail shop generates AED 240,000 annually and the market cap rate is 8%, its valuation would be:

AED 240,000 / 0.08 = AED 3,000,000

Learn more in my in-depth article on cap rates and commercial valuations in Dubai.

Note: Banks usually use conservative assumptions—sometimes discounting actual rental income or using a lower market rent estimate. It’s vital to understand this before negotiating a purchase or applying for financing.

Loan-to-Value (LTV) Limits for Commercial Mortgages

Banks in the UAE are more cautious with commercial lending due to increased risk and lower liquidity in the resale market.

Typical LTV Limits:

• UAE Residents/Companies: 60%–70% of the bank’s valuation

• Non-Residents: Typically capped at 50%–55%

• New businesses or asset-backed SPVs: Lower LTV or more scrutiny

Note: The bank’s valuation is often lower than the purchase price, especially if yield assumptions or tenant quality are weak. This means your effective down payment could be higher than expected.

Interest Rates for Commercial Property Finance

Rates are generally higher for commercial mortgages than for residential, due to perceived risk and the complex nature of repayment sources.

Loan Type	Fixed Rate (1–5 yrs)	Variable (EIBOR + margin)
Commercial Mortgage	From 4.5% – 5.5%	Margin of 1.5% – 2.5%

Some lenders allow interest-only payments for a defined period—useful for investors seeking cash flow while stabilizing a new asset.

Eligibility Criteria for Commercial Loans

Banks evaluate both the borrower and the asset when approving a commercial mortgage. Here’s what they look for:

For the Borrower (Company or Individual):

• Valid trade license (if applicable)

• Clean credit history

• Business profile and operating history (2+ years preferred)

• Proof of income or consolidated company accounts

• Passport, Emirates ID (for residents), or corporate documents for offshore SPVs

For the Asset:

• Valid title deed or Oqood (for ready properties only)

• Existing tenancy contracts (for leased properties)

• Lease renewal history (preferred)

• Strong location and tenant mix

• Evidence of market yield and demand in the area

Step-by-Step Guide: Getting a Commercial Mortgage in Dubai

The commercial loan process takes longer than residential, due to the detailed valuation and risk assessment involved. Here’s a breakdown:

1. Initial Discovery & Feasibility Review

We discuss your goals, property type, and finance needs. I’ll perform a feasibility assessment to determine whether the deal is viable based on yield, cap rate, and target loan amount.

2. Bank Matching & Pre-Approval

I submit your profile and proposed property to the most suitable lenders. Pre-approval letters typically take 5–10 working days.

3. Valuation & Income Analysis

The bank assigns a third-party valuation firm to assess the property using yield and cap rate benchmarks. This is the key factor in determining your loan amount.

4. Final Approval & Offer Letter

If the valuation supports your requested loan and you meet eligibility, the final offer letter is issued. This document includes all key terms.

5. Signing & Mortgage Registration

You sign the facility agreement, and the mortgage is registered at the DLD. Bank fees, insurance, and DLD charges are paid at this stage.

6. Disbursement

The loan is disbursed to the seller or developer, and the transaction is completed.

Costs & Fees to Consider

Fee	Range / Description
Bank arrangement fee	1% – 1.5% of loan amount
Valuation fee	AED 5,000 – AED 10,000 depending on property size
Mortgage registration	0.25% of loan amount + AED 290
Legal review / SPV setup (if needed)	AED 5,000 – AED 15,000
Property insurance	Mandatory; varies by asset type
Life insurance	May be required for individual borrowers

In many cases, we can negotiate reduced arrangement fees or roll certain costs into the loan amount.

Equity Release on Commercial Properties

Already own a commercial property in Dubai? You may be eligible for equity release—unlocking liquidity tied up in the asset without selling it.

Key Conditions:

• Up to 60% of current market valuation

• Rental income must support the increased loan burden

• Works best for fully leased, income-generating assets

• Fresh valuation required

• Ideal for expansion, business growth, or new acquisitions

Note: Properties with unstable cash flow, short lease terms, or recent vacancies may face tighter restrictions.

Common Challenges (And How I Help Solve Them)

• Valuation comes in lower than purchase price:I help you pre-evaluate likely cap rate assumptions so you’re not caught off guard.

• Rental income not accepted in full:I work with banks that accept full market rent or projected income (based on demand and tenant strength).

• New company without 2-year track record:I can structure deals through personal guarantees, co-borrowers, or parent companies.

• Need refinancing or better terms:Many clients refinance after 2–3 years to access better rates or release equity.

Ready to Finance Your Next Commercial Property?

Commercial mortgages in Dubai can be highly rewarding—but only when structured correctly. As a licensed property investment strategist and CMAP-certified advisor, I work hands-on with business owners, developers, and investors to structure commercial loans that maximize yield, reduce cost, and simplify approvals.

Whether you're acquiring a retail unit in Business Bay, a warehouse in Al Quoz, or an office in JLT, I’m here to guide you through every step.

👉 Try My Mortgage Calculator👉 Read more about cap rates and commercial valuations

📞 Or contact me directly for a free, no-obligation consultation.

Stephen James Mitchell

CMAP Certified Property Investment Strategist

📞 +971 50 225 7322