How to make the most of your property during Dubai’s short-term rental real estate boom

real estate boom

Vacation rentals exceed long-term rentals by 15% in terms of average rental yield, and Dubai’s short-term rental sector is booming .

Imagine getting an alert in the morning saying, “Your Dubai apartment has been reserved for an additional week!” This is not just a dream, but a real, profitable opportunity that is simply waiting to be seized.  With the help of our knowledgeable guide, discover how to turn your house into a profitable short-term rental.

real estate boom

Overview of Dubai’s Short-Term Rental Market

Dubai is considered one of the best tourist countries these days as the country’s tourism sector is showing fantastic growth!  Dubai saw a remarkable 21% rise in tourist arrivals in just the first three months of 2024 compared to the same time the previous year (source: Dubai Tourism). 

The rapid growth of Dubai’s tourism sector not only benefits the hotels but it provides great benefits to short-term rental properties and other properties sectors, especially attracting tourists. Tourists who visit Dubai these days prefer to stay in short-term rental apartments rather than staying in one hotel room because these rental apartments provide both feasibility and privacy. You have your whole apartment where you can go in and out without being restricted to anything.

There will be no quick slowdown of this trend.  With short-term rental bookings up a noteworthy 30% from pre-pandemic levels, Expo success is continuing to fuel Dubai’s tourism fire.  

It is evident that Dubai’s market for short-term rentals is expanding, and there is great potential for property owners to take advantage of this profitable venture.  

Turn Your Property into Short-Term Rentals

The promise of higher returns on investment in dubai comparison to conventional, more reliable long-term leases is one of the main factors driving the craze for short-term rentals.

According to Louise Heatley, owner and managing director of Exclusive Links Real Estate Brokers, “We are already seeing the annual income from short-term leases lessen due to the higher rental prices being achieved today, even though short-term leases typically generate 20–25% more income over a year compared to long-term rentals, based on a minimum of 80 percent occupancy.”

dubai skyline

In Dubai, traditional yearly rent prices have risen, with the biggest increases, depending on the neighbourhood, ranging from 20 to 60 %. There is less rental inventory available as a result of the increase in buyer activity across market categories.

While many landlords may benefit from this scenario, many are opting to profit from the short-term rush for greater yields since, in contrast to long-term contracts that are fixed at an interest rate, pricing may be changed more frequently depending on the market.

In addition to monetary rewards, short-term rentals provide landlords and investors with a big benefit: flexibility.

“Short-term rentals allow investors to diversify their income streams by catering to tourism. This helps mitigate risks associated with vacancies or fluctuating demand, and offers opportunities to capitalise on seasonal trends for optimised occupancy rates,” Abdullah Alajaji, Founder and CEO of Driven Properties, said.

In contrast to long-term leases, he continued, owners of short-term rental properties have the flexibility to modify usage, availability, and pricing in response to shifting market conditions and individual preferences, offering flexible investment options.

UAE’s laws governing short-term rentals: Everything you should know

According to Heatley, “any new buyers thinking about turning their properties into short-term rentals need to be aware of the rules established by the Department of Tourism and Commerce Marketing.”

Prospective purchasers and investors must be aware of and abide with all applicable laws and regulations as issued by authorities. If you don’t, you risk fines and legal problems.

The regulatory agency in charge of the short-term rental industry and travel industry in Dubai is the DTCM. Heatley listed the following as some of the essential conditions:

  • Before listing their property for short-term rentals, owners must obtain a permit from the DTCM.
  • The hotel needs to conform to DTCM criteria, which include the latest requirements like providing guests with keyless entry.
  • Owners must take into account monetary responsibilities such as licensing, town, and tourism fees.

Although they can do it themselves, the experts advised landlords to choose a management business to take care of the hassles of property management and make sure all licensing requirements are met. This will increase compliance and safeguard the landlord when dealing with visitors.

She also mentioned that the DTCM will only issue up to eight permits to landlords who wish to self-manage. “If more are needed, the owner will need to apply for a trade license and to be recognized and approved as a professional operator.”

“Hiring a management company with expertise can guarantee increased occupancy rates, improved guest experiences, and adherence to local laws,” stated Juhász.

He said it would be more convenient to have a business maintain the property because they would take care of everything, including marketing and upkeep, especially for owners who are not headquartered in Dubai.

“Government approvals through the DTCM are mandatory on all short-term properties in Dubai and one of their requirements is that the ‘host’ needs to be available on call 24/7. As a landlord self-managing your property, only you can evaluate the time required and return on investment,” said Heatley.

“They [buyers] ought to be informed on local rules, such as those about zoning, licence requirements, and tax obligations. Alajjaji added, “They should also check homeowner association laws, make sure building and safety codes are followed, and get the right insurance coverage.

Setting up rules for behaviour and guest screening is crucial for security and safety. He continued, “You can help ensure legal compliance and success in the short-term rental market by conducting thorough research and seeking professional advice.”

The properties that appeal the most to short-term buyers

So which kinds of properties in Dubai are thought to be the most profitable for short-term rental conversions? Experts indicate that prime targets are premium properties situated in strategic places.

As per Heatley, “the most desirable properties are those that are located in areas that are well-known for their affordability, amenities, and superior transportation connections, along with those that provide a luxurious lifestyle.”

She mentioned luxury apartments in Dubai Marina, Business Bay, Downtown, and Jumeirah Beach Residences as popular homes, as well as full villas on Palm Jumeirah that are frequently rented short-term for special events.

Luxury homes in desirable areas like Downtown Dubai, Dubai Marina, and Palm Jumeirah are popular choices for travellers, especially those who are travelling for the first time, according to Alajaji, who repeated this. Large villas with private pools and seaside residences are popular choices for families or parties looking for an opulent getaway, he continued.

In 2024 and beyond, many important demand factors are anticipated to have an impact on Dubai’s short-term rental market.


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