Dubai: Hotels in Dubai will need to keep a wary eye on the advances that Airbnb — the short-term property rental app — has been making. Properties listed in Dubai on Airbnb were able to record a significant 421 per cent increase in revenues to $3.3 million (Dh12 million) over a 24-month period up to August last.
Looking at it another way, the $3.3 million represents a loss of revenue for hotels in the city.
And total listings have tripled to 3,249 properties, according to an update from the real estate consultancy Chestertons MENA.
Airbnb’s prospects have been helped immensely by the relaxation of rules, “effectively making it possible for home owners and tenants to cut out the middleman and list their property directly on the site”, Chesterton says.
But the report says that Airbnb might be complementing the local hospitality sector in its own way.
During the low season months of June to August, Airbnb occupancy levels averaged nearly 40 per cent and on par with that of the hotel industry. And during the peak season, Airbnb listed properties have averaged occupancy rates of 57 per cent.
“Many real estate investors are diversifying into the holiday home rental market because of the ease in regulations, combined with higher returns when compared to the traditional rental market,” said Ivana Gazivoda Vucinic, Head of Advisory and Research, Chestertons Mena. “On average, investors can expect an additional 5 per cent return when compared to long-term leasing rental yields.”
Average daily rates (ADR) for Airbnb listings have been consistent with prices in August 2015 averaging $153, $154 in August 2016 and remaining the same in August last. The first three months of 2017 — coinciding with the peak tourism season — saw ADRs of $226, $201 and $204, respectively.
“New regulations and an increase of Airbnb supply will help grow and diversify tourism, increase choice and attract new guests to the emirate while also providing investors with an alternative income stream,” added Gazivoda Vucinic.
Factbox: Opening the doors
* It was in April 2016 that the Executive Resolution No (1/2016) concerning the second edition of “Dubai Holiday Home Rental Regulations” was introduced. This resulted in a relaxation of rules surrounding holiday home rentals.
* The Dubai Department of Tourism and Commerce Marketing subsequently signed an agreement with Airbnb in May 2016, to help further regulate the accommodation offering and ensure only whole or integral units are marketed.
