Dubai's short-stay marketplace is turning into an all-year one when it comes to demand. If it's not during holidays, landlords can let it out for business travelers. It's that kind of demand pattern. Image Credit: Shutterstock

It is often assumed that people searching for short term rentals in Dubai want to save on the cost of a five-star hotel. In fact, the market is different here compared to other parts of the world. Vsitors are looking for a way to live the luxurious lifestyle that Dubai is synonymous with, and willing to pay a premium to experience it. Demand for options such as luxury penthouses and villas is creating big returns for owners who enter the short-stay market.

For tourists with a big budget, it’s a no-brainer. They can enjoy the same spectacular views of Burj Khalifa or Dubai Marina as they would in one of the surrounding hotels, but in the comfort of a lavish penthouse apartment, with home-from-home comforts and amenities on the doorstep or just a click away on an app.

Then there is the benefit of staying in a spacious villa if you want to accommodate more people than a hotel room can, in an equally, if not more, luxurious setting. Whether it’s a large group wanting to party on Palm Jumeirah or a family looking to find peace and serenity in the suburbs, there is more choice than ever to suit different tastes.

Families and friends who are celebrating milestones will often opt to stay in a well-equipped villa to enjoy the true ‘Dubai experience’, while travelers coming to spend extended periods in the region may be looking for more space and more privacy.

Top performing areas

According to a report by AirDNA, the current average daily rate (ADR) for short term rentals in Dubai is Dh787.7 with a total of 32,099 listings in the city, a 36 per cent increase on last year.

We are seeing more high-end luxury listings coming on to the market and this is as a result of increased demand. Some of the top-performing neighborhoods are Palm Jumeirah, Downtown Dubai, and Dubai Marina and, if you have the funds to make an investment, these are highly lucrative areas to buy in.

Investor opportunity

For owners, if you’re sitting on an apartment or villa in a prime location, you could be missing out on a lucrative income stream. The short-term rental market provides on average 20 per cent higher returns than long-term - over two to five-years.

Tourism in the region is also experiencing huge growth with 17.15 million overnight visitors welcomed to Dubai in 2023, an increase of 19 per cent compared to 2022.

The areas which provide the highest rate per night in terms of short term rentals are Dubai Marina, Jumeirah Beach Residence, Palm Jumeirah and Downtown Dubai. But the property values are so high, that they don’t always offer the biggest returns.

Some of the best RoI comes from areas such as Jumeirah Lake Towers (JLT) and Jumeirah Village Circle (JVC), but the accomodation options here attract a different type of client. In Dubai we are lucky that we have a real cross-section of visitors from all over the world with different budgets and reasons for being here.