The number of holiday home listings in Dubai hit 18,000 in August, up 38 percent year on year, as investors look to capitalise on the emirate’s popular tourism industry.
The mix of short and long-term lets are most favoured in hotspots such as Dubai Marina, Palm Jumeirah, Downtown Dubai and Business Bay, according to the latest research from Valustrat.
Occupancy levels were down slightly by 1 percent to 56 percent, but average daily rates were up 4 percent at AED762 and revenue per available room was up 2 percent at AED434.
Visitors are also staying longer, for five days, which is a 6 percent increase compared with the same period in 2023.
“The holiday homes market faces challenges from the increasing supply of hotel rooms and serviced apartments offering competitive daily rates,” said Valustrat’s Haider Tuaima.
“However, high-quality, medium to large holiday home units in tourist-heavy areas appear to be more resilient to these challenges.”
Hotel push
Dubai has more than 151,000 rooms across 825 hotels. More than 2,700 new hotel rooms were added in the emirate in the first half of this year, and a further 10,100 are scheduled to open by the end of 2025, research from property consultant Cavendish Maxwell shows.
Dubai welcomed 10.6 million visitors between January and July, up 8 percent on the same time last year.
Average daily rates over that time in hotels was AED527, while revenue per available room was AED406, figures from the government show.
Holiday lets remain a relatively lucrative option for landlords. A survey by UK insurance company CIA Landlords in 2022 found that Dubai was the most profitable city in the world for Airbnb properties. It revealed that lets in the downtown area of the emirate fetched on average $1,150 per night.
Redeet Negate, who started his holiday home business SmartStay in Dubai in June last year, said studio apartments could be let for as little as AED200 a night in the low season, although an apartment with Burj Khalifa views over the busy New Year period could get as much as AED20,000 per night.
“It can be a lucrative business, but you have to lock in the right rents,” he said. “You have to make sure that your reviews are good, that your prices are dynamic.”
Most recent regulations from Dubai’s tourism authorities mean anyone interested in letting a holiday home must form an LLC onshore company with a Holiday Homes license to operate and be licensed with the Department of Economy and Tourism, paying the tourism tax, otherwise known as the tourist dirham. An office is also necessary in order to do this sort of business in the UAE.
Negate said the requirement to set up a company has “made people think twice” about entering the sector, although there are still around 500 operators in Dubai.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - September 2024
