The living room at the 118 Downtown apartment leased out to bnbme. A month’s stay at the apartment occupying an entire floor of the premium residential tower costs Dh220,000. Image Credit: Supplied

Dubai: Residential rents are dropping in Dubai … but not necessarily in every category. An apartment in the Downtown is being leased at $60,000 (Dh220,350) for a month’s stay — potentially a record in the local short-term rental space.

The apartment occupies an entire floor of the 118, a super-premium residential tower from Signature, a joint venture between the Lal’s Group and Regal.

It was the holiday homes operator bnbme that took the lease on the apartment and then placed it on the market for stays of up to a month. So far, a Bollywood star and a footballer from the Italian league have made use of the unit. Now, bnbme expects to lease two more units — each occupying an entire floor, of course — to its portfolio.

“There are visitors to Dubai who want the same level of services as booking a Presidential Suite at a luxury hotel would get them,” said Vinayak Mahtani, CEO of bnbme. “Short-term residential stays can provide them the same services at prestige locations, for which they don’t mind paying a premium. And they will have relative anonymity that a hotel can never ever provide.”

For sure, at the 118, there are only 28 apartments across the entire development. The apartment that was leased by bnbme carries a sales tag of $10 million.

Short-term rental in the premium space is one category that has had a relatively stable run in the last 12 months. A sizeable pipeline of new serviced residences managed by leading hotel chains will be delivered in the next two years. And no one has been saying — so far — that this category too is headed for an oversupply.

For developers too, demand for super-luxury holiday homes will open up possibilities. By leasing these homes to third-party operators, they are assured a steady income stream. That means they don’t have to carry that extra pressure of trying to find buyers — investors or end users — for each and every unit.

“We would like to think that such homes can compete with the best Presidential Suites at a hotel,” said Mahtani. “From a full-time butler to a luxury SUV, every need of the tenant is covered.” (The operator also has a unit on lease at the 23 Marina, the tallest all-residential tower, at Dubai Marina. Single-day rents are from $1,000.)

But what of the premium end of the broader residential leasing market in Dubai? Upscale locations remain under pressure, and could come under further strain as new homes get delivered at Mohammad Bin Rashid Al Maktoum City. Plus, there will also be the first towers being readied at Dubai Creek Harbour, and they would influence dynamics in the top-end of the rental market.

In a recent report, Ryan Kasper, Luxury Rentals Director at Luxhabitat, said: “Landlords are using more creative means by which to maintain their rental returns and lure in tenants. This includes offering 13-month rental contracts, renovating and upgrading older properties, as well as more owners furnishing and renting their properties on a short-term basis.

“Demand for high-end luxury properties — renting on average for over Dh400,000 — has been maintained and is expected to continue throughout the next quarter (the fourth quarter of 2018).”

Which means that the silver linings are still there in the local property market ... one just needs to keep looking for them.

Priciest rental properties in Dubai as of now:

* A 7-bedroom villa in P Sector, Emirates Hills — leasing for Dh2.5 million a year;

* A 5-bed penthouse at the Volante, Business Bay — leasing for Dh1.6 million a year;

* A 5-bedroom villa at E Sector, Emirates Hills — leasing at Dh1.4 million a year;

* A 6-bedroom villa at HT Sector, Emirates Hills — leasing for Dh1.3 million a year; and

* A 4-bedroom penthouse at the Five Palm on Palm Jumeirah — leasing at Dh1.3 million a year.