Emaar sent out a notice recently informing that all holiday home leasing within Downtown Dubai should be terminated from September 19, as the master-developer made an entry into the market with its own digital platform called “Ease by Emaar”.
As tourism continues to be a key factor in Dubai’s expanding economic growth, the concept of holiday home rentals is on the surge. While the recent news by Emaar is not likely to impact leading areas in Dubai — due to the ready provision of the world’s best hotels and hotel apartments — the notice is still ambiguous on the outcome in Downtown. The question is: Does the notice apply only to towers and projects managed by Emaar or is it more than that? Yes, Emaar is the master-developer of Downtown, but they don’t manage every tower in the area. For example, Mada Residence in Downtown is a development by Artar, and Artar has assigned the strata management for the common areas of Mada Residence. In the owner association statement, holiday homes are allowed in Mada Residence.
If Emaar manages to enforce this move and blocks landlords from operating holiday homes in Downtown for Emaar projects, then that gives a great advantage to private developers within the Downtown area where they will actually be able to operate holiday homes.
Measuring the real impact
The 1,000 or so apartments within the Downtown leased as holiday homes are not going to make much difference to the people in the city. Dubai has a lot of potential with the growing demand in the tourism industry. For example, near Downtown, we have City Walk, which is a very important location for holiday home apartments. It does well, especially with local visitors from the other emirates and, of course, across the GCC too.
It is also good news for all Emaar hotels within the Downtown area, because holiday homes are an indirect competitor to hotels, and so when the holiday homes business is halted in that area, then Emaar hotels are in for good.
Private developers can have their way
Sub developers like Artar and others within the Downtown area might witness more demand because of their monopoly with the holiday home license. While 90 per cent of Downtown is built by Emaar, there is still the 10 per cent that is built by private developers who purchased land and built their own towers. It is pretty unclear but it seems like Emaar cannot force private developers.
In the owner association statement of a private developer’s building, it states allowance of holiday homes, and accordingly every single owner has signed this statement.
If the law is to be reviewed, one good suggestion would be to allow holiday homes, but only if the landlord owns the full floor and is not disturbing direct neighbours. This is what we personally practice at Fam Living. For example, we have holiday home apartments in Mada Residence and the vast majority covers the full floor, so we don’t get complaints. The same applies to the vast majority of stock in City Walk.
Despite this, even if Emaar wanted to apply this, it is ideal to have one year notice. Not only will this one year period be fair, but this will also allow people to really seek options — otherwise there might be an immense amounts that will be lost. People will definitely lose a lot on furniture, on paying rent to landlords, and plus there will be disputes between landlords and holiday home companies.
In summary, there are plenty of holiday home companies who actually sublease apartments. There are tens, if not hundreds, of apartments being rented this way — a company pays for a specific time period to the landlord and then operates/rents on short-term holiday home basis.
Keeping this in mind, it seems very difficult for the new rule to be enforced, within such short notice. As we wait for September 19, let’s hope for the best from Downtown’s master-developer.
Firas Al Msaddi is CEO at Fam Properties and Fam Living.