At present, there are slightly fewer than 25,000 active Airbnb listings – up by more than 11,000 from 2021 – with annual average occupancy at 56 per cent, according to Dubai-based real estate consultancy ValuStrat, which has tracked and analysed the data it sourced from the California-based company.
ValuStrat said almost half the private properties are located in the city's prime tourist areas of Dubai Marina, Jumeirah Beach Residence, Downtown Dubai and Business Bay.
It is a lucrative business if you can get it right. An average profit margin of about Dh3,500 ($1,000) per unit each month is a typical target and most will aim to build a portfolio comprising tens of properties.
In 2022, Dubai was ranked as the most profitable location in the world for Airbnb landlords, according to a survey by UK-based landlord insurance company CIA Landlords.
The survey found that landlords who leased properties in Downtown could command an average of £930 ($1,150) per night.
There are Airbnb operators of all sizes in Dubai. From one of the largest, such as Frank Porter which manages more than 700 Airbnb properties in Dubai, to one of the newest in Redeet Negate, from the Netherlands, who started his holiday home business SmartStay in June and has a current portfolio of 24 listed on Airbnb.
Mr Negate, as is the case with many of his peers who use social media to reach new customers, has a target to reach 100 properties, which would give him a portfolio akin to leasing a medium-sized hotel.
Although relatively new, the holiday homes market is set to experience similar growth trends over the coming years, according to Haider Tuaima, director and head of real estate research at ValuStrat.
“We already know it tripled in three to four years, and this is including the Covid period, which is amazing on its own. But we need to remember that we had Expo, [during] which there was a lot of demand for hotels during ’21 and ’22,” Mr Tuaima tells The National.
“Probably the momentum will be slower but the growth will continue in the coming years, especially now that we have the regulation there.”
New trends
Large-scale operators tend to favour subleasing properties – or rental arbitrage – as they give a higher profit but require more cash upfront. Revenue sharing, a second preferred method that involves managing the property for a commission, is also popular because it does not require as much starting capital.
Airbnb is the primary letting channel for most, although Booking.com and Expedia, to a lesser extent, are also used.
Regulations are in place for holiday home rentals in Dubai. Operators looking to build a portfolio must first register their company on the mainland with the Department of Economic Development to get a licence from the Department of Tourism and Commerce Marketing (DCTM).
Each subleased property has to have permission from the owner and a move-in permit is required from each building.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q4 2023
