Dubai’s holiday home business can still deliver much in 2023

The demand for vacation rentals in Dubai has not fallen over the past 12 months - if anything, it only grew significantly. The challenge will come when supply of short-stay homes outpace demand. We have seen this many times over.

It happened in Las Vegas in the late 1980s with hotel rooms when the Strip came up, and to an extent with Dubai hotels in the last decade. However, what we have also seen is demand always catches up with the supply.

The last 12 months saw the organized vacation rental space grow from just under 10,000 properties in Dubai to over 25,000 active properties. Just like it took Las Vegas a few years, the Dubai vacation rental industry will take its time to find a common ground. Several owners will move back to long-term rentals as rents keep soaring.

A natural dropping out

Holiday home management companies unable to offer any additional value to the guest or property owner will go out of business, and others will just not find it attractive enough to pursue. It’s a correction that needs to - and will - take place and then the industry will start to grow again.

From a perspective of demand, we only see this increasing every year. Dubai is naturally built for holiday homes, with amazing facilities such as private beaches, Infinity pools, and beach clubs, all within a residential complex. Add to this services that holiday home companies offer - such as room service, concierge facilities, etc. - it becomes very difficult for a guest to differentiate between a luxury resort or a luxury vacation rental.

Research shows that short-term renters are looking for larger rentals that can accommodate groups and families. As such, the average number of rooms for booked properties has grown consistently over the last five years and spiked in 2022 as guests avoided smaller properties in favour of larger homes in prime locations such as Downtown Dubai, Jumeirah Beach Residence, Dubai Marina, Jumeriah Village Circle, etc.

Awaiting the Chinese rush

Not only visitors from China, more tourists from Hong Kong, Singapore, Malaysia and Australia will start coming back to Dubai over the next few months. People from all over the world are also considering of investing in Dubai. A lot of them are investing in second homes in the UAE, and utilizing short-term rentals to help pay their mortgage and other living expenses.

According to the 2022 Airbnb annual survey of hosts and guests, approximately 45 per cent of hosts reported that income from renting their property helped them continue to afford their homes’ expenses, while more than 20 per cent stated their rental income kept them from having their property foreclosed or being evicted.

There will always be apprehensions about the industry.,However, data shows this industry has the ability to achieve results for property owners, both individual and institutional. As such, we are confident that the short-term rental market is poised to continue to grow this year too…