Downtown is the darling of the short-term rentals market, says Mahwussh Alam, whose brokerage company One Perfect Stay has maintained a steady 90 per cent occupancy in Downtown and the neighbouring central areas of DIFC and Business Bay. From corporate travellers to families and executives calling it home for a few months, occupancy hardly flutters here, she says.
“Out of 100 leads we receive each day inquiring about short-term rentals, 75 of them are looking for a place in DIFC or Downtown. The reason is simple: these areas enjoy a great location and are easily accessible from all parts of the city. Fifty per cent of the tenants in these areas are short-term clients who are either corporate travelers calling Dubai home for a few months or families preferring to be near the Dubai Mall as it has everything to offer. Downtown never stops to shine,” Alam says.
The savvy resident
The audience in Downtown and DIFC can be classified into travellers, businesspersons, and families and now there is a new variant in the segment, the “savvy resident” who likes to keep the risk exposure minimum and does not wish to lock the upfront money on deposits and commission. “The pay-as-you-go residents are our biggest clients these days,” adds Alam.
DIFC holds its value as it is the most sought-after pocket of Downtown Dubai where the biggest share is taken by corporate executives staying for an average of three to six months. Besides Downtown and DIFC, Business Bay also has a great inventory of homes from studios to large penthouses. “When it comes to a home that gets handpicked by the guest, there are key differentiators such as the floor level, interiors, view and finishing of the unit,” explains Alam.The demand for well-maintained holiday homes or short-term rentals led Alam to start her second start-up, One Perfect Space, that looks into renovating first generation buildings, which need a facelift and a refreshed look.
Choosing between a hotel or a short-term rental
Anna Skigin, CEO of Frank Porter, says staying in a short-term let is significantly better for a family, than staying at a hotel. “The benefits have been amplified over the past year as well, with hotels introducing more and more restrictions on their offerings for families. Anyone travelling with kids is well aware of the difficulties, from not having enough space to timing meals or washing clothes. Short-term accommodation eliminates these problems and many more.” Short-term rentals usually have well-equipped kitchens where families can cook their meals at any time of the day, making it convenient for a family on different schedules. This also means serious savings, if and when you need. “The really great thing about short-term lets is having more space. You can get a large two-bedroom for two adults and two kids, with everyone having their own area, yet staying together. This also means multiple bathrooms! Booking a hotel usually means booking two rooms or paying above and beyond for multiroom suites. The larger the family, the more space is needed and valued at a holiday home,” says Skigin.
Return on investment
According to Alam, smaller units are always preferable by both individual and portfolio investors as they are easy to liquidate and less expensive to maintain. Recently we have seen lines blur between long and short-term rentals. Our typical ratio of 70 per cent short- term bookings (three nights to two weeks) and 30 per cent long-term bookings (a month or longer) have been swapped as residents are moving towards short term rental preferring to pay monthly and saving on big upfront costs like commissions and deposits etc.
The current ADRs (average daily rate) for Downtown and Business Bay are the best ones in the market and couple that with 90 per cent occupancy, the results are attractive. “Downtown is lucrative for institutional investors or developers who want a one-stop shop solution to manage an entire building or block and monetise it consistently with high ADRs and occupancy without any hassle,” says Mahwussh.
Skigin says, “The new reforms, such as citizenship, long-term visas, and business incentives will increase investment in Dubai property across the board. Those in Dubai already are now more likely to invest in the city and those never having considered Dubai as a real estate investment, are now changing their minds as more options to remain in Dubai post retirement open up.”