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A Step-by-Step Guide to Warehouse Rental in Saudi Arabia

Announcements

3 May 2024

AstroLabs Team

The ripple effect of the Kingdom’s sustained appeal to multinational enterprises and startups is seen across various facets of the business environment—particularly in the increasing demand for commercial real estate like warehouses.

Businesses looking to optimize supply chain operations and reduce operational overhead are the main drivers behind this trend. Saudi Arabia’s warehousing market is estimated to have a robust 4.5% CAGR, which translates to over $13.2 billion market size by 2030. Public warehouses in major cities like Riyadh, Jeddah, and Dammam are most in demand by companies within the retail and e-commerce sectors.

The Role of Ejar in Facilitating Commercial Property Transactions

To support this growing demand and simplify the process of acquiring or renting commercial properties, the Saudi government introduced Ejar in 2018, a system designed to provide a secure and convenient way to manage leases electronically.

The Ejar platform streamlines the leasing process, simplifies transactions, improves security, and ensures transparency between the landlord and the tenant. It also aligns the leasing transaction with the legal and regulatory frameworks established in the Kingdom.

This system is particularly beneficial for businesses looking to rent or purchase warehouse space because it offers an integrated suite of services that facilitate everything from contract management to payment processing.

How to Rent a Warehouse in Saudi Arabia Using Ejar?

As businesses look to capitalize on the lucrative opportunities in Saudi Arabia, understanding the commercial regulations, administrative processes, legal requirements, and how to leverage governmental systems like Ejar can drive organizational success.

To rent a warehouse within the Kingdom, companies meet specific documentation requirements. The following steps outline can guide you through this process.

Step 1: Document Submission

The renting company must provide the following documents to the landlord:

  • An active account in Ejar registered under the General Manager's (GM) Iqama number: This confirms the company’s registration and active status on the Ejar platform, which is essential for processing any real estate transactions.
  • Commercial Registration (CR): The CR proves the legal existence of the company and its eligibility to engage in business activities within the Kingdom.
  • Articles of Association (AoA): These documents outline the company’s purpose, the rights and responsibilities of its members, and the structure of its management.
  • Copy of the GM's Iqama/ID: The ID is needed to verify the identity of the individual authorized to act on behalf of the company.
  • Absher number registered in Ejar under the GM's number: Absher is a government service portal in Saudi Arabia. The Absher number linked to Ejar guarantees that the company’s details are accurately recorded and accessible through government systems.
  • VAT number (if applicable): For businesses engaged in taxable activities, a VAT number is required to handle all tax-related transactions.

In some cases, the renting company (for audit purposes) may also need documentation from the landlord, such as their VAT registration, ZAKAT registration, and Commercial Registration (CR).

The documents confirm that all parties involved in the leasing process are compliant with Saudi Arabian laws and regulations. Therefore, during this process, it is crucial to ensure that all documents are accurate, up-to-date, and meet the landlord's criteria.

Step 2: Contract Creation and Sending

Once the documents are verified, the landlord creates a rental contract through the Ejar system. The contract is then sent to the renting company’s Ejar account, where it can be reviewed.

Step 3: Contract Review and Acceptance

The renting company can then review and either accept or request changes to the contract through their Ejar account. To do this, the authorized personnel of the renting company must log into the Ejar system, access the contract, and review its terms and conditions thoroughly.

If the terms are agreeable, the contract can be accepted electronically through the system. Any disagreements or adjustments can be addressed by rejecting the contract and requesting modifications.

Step 4: Payment Options

The final step in the process is the payment for the warehouse rental, which can be handled through multiple channels, including the Ejar system and a standard bank transfer.

If payments are made directly within the Ejar system, the funds will be received by the landlord only after a processing period of 5-10 days. Because of this, some landlords prefer payment through a bank transfer. Coordinate with the landlord to obtain the necessary bank account details.

Important Considerations

It is recommended to maintain clear records of all communications, contracts, and payment receipts for future reference and auditing purposes. Compliance with any additional regional or industry-specific regulations or licenses is also crucial.

Additionally, consider to also include in the agreement specific information regarding the warehouse, or other details, such as the completion date (if the warehouse is still in development) or payment installments.

Achieving Operational Success With Warehousing Solutions

To make things even easier for companies tempted to enter the Saudi market, the government designed electronic systems for all business operations, including the Ejar platform for buying and renting commercial property. The platform simplifies the leasing process by offering an inclusive set of services, from contract management to payment processing.

Looking ahead, Saudi Arabia's ongoing reforms and investments in infrastructure are set to further elevate its status as a key business hub in the region.

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