There has perhaps been no better time to be a real estate investor in Dubai than right now – the market is busier than it’s ever been, particularly when it comes to prime real estate. The first quarter was full of some spectacular highs and more than halfway through Q2, things continue to look strong.
Another key segment of the market that has been growing is short-term rentals – there was a 100 per cent increase in demand from 2020 to 2021, and occupancy levels stayed well above 80 per cent throughout the year. There have been brief dips coinciding with the rise of the Delta and Omicron variants, but as the UAE continues to stay on top of the pandemic, it remains a haven for those who are seeking a relaxing short stay.
The Expo was one of the biggest drivers for short-term rentals in 2021 - but a post-Expo Dubai is generating sustained interest from international tenants.
Price is no object
It’s no surprise that in the age of AirBnb, Dubai has become a key city for holidaymakers. Whether looking for the perfect beach getaway, the comfort of a quiet suburban neighbourhood or prefer to stay in the heart of the urban landscape, this city has something for everyone. Dubai Marina and Downtown Dubai are consistently at the top of the list, offering a complete lifestyle offering that combines retail, F&B and leisure.
At the higher end of the market, Palm Jumeirah is the neighbourhood choice with villas commanding as much Dh4 million a month – the purchase price of a townhouse in one of Dubai’s more central residential communities.
For the right property and more importantly the right lifestyle, tenants don’t mind paying a premium. There is also an uptick in corporate tenants. Multinational companies are always on the lookout for the best-serviced residences where they can place C-suite executives. As the cost of accommodation is taken up by the company, price takes a backseat to the quality of life on offer.
The growth of the short-term rental market is a particularly attractive proposition for property sellers and landlords, though some of them might not realise it yet. If a seller has been struggling to sell their home – because the price isn’t right for the market, or for some other reason – then putting it up for a short-term lease is a great option to consider.
This is something that is particularly noteworthy in prime villa communities, where the market tends to move at a slightly slower pace compared to apartments. Rather than letting your home languish on the open market, rent it out for a few months. You then get the double benefit of a rental income in the interim, and the sale price once the property does sell. The same applies to landlords who haven’t secured an annual lease on their property yet.
There would be some cost involved in putting a home up for short-term leasing, whether the owners decide to convert it into a holiday home themselves or work with an agency to do so. The outcome is well worth it.
Investors in particular can find that they are generating some fantastic yields on a month-to-month basis compared to an annual rental. There are just so many people who are seeking to enjoy all the comforts of living at home during a short stay in the city and they are willing to stretch their budgets if the place is just right.
Flexibility is the future
Flexibility is the key factor that appeals to people – you can rent a home for a month or half a year, and there are even options to rent out for a full year while paying on a monthly basis instead of being locked into an annual contract. This has created a surge in demand not only from overseas visitors, but from Dubai residents as well.
In the wake of the pandemic, staycations are often preferable to going through the hassles of travel – PCR tests, mandatory quarantine periods, the risk of travel protocols changing before you fly back. As such, residents are on the lookout for short-stay options available in the city.
There is still quite a bit of unpredictability around the world, and there seems to be something new in the news cycle every day. A ‘return to normal’ is still very much a work in progress, but no matter what is happening anywhere in the world, Dubai does manage to keep positioning itself as the city to be in.
Visitor numbers are expected to keep ticking along at a steady pace, and they will be looking for only the best options available to them. But we can also expect to see a growth in domestic enquiries, with staycations continuing to be a viable option for many who still see too many downsides to flying out of Dubai.