Following the regulation permitting property owners in Dubai to license their residential units as holiday homes, these can be rented out from a few days to a week or two. While the trend is riding a wave, local owners associations (OAs) have to ensure that they work together with building managers on selecting vacation rental firms that are allowed to operate in their buildings.
Each owners association should outline a set of rules that dictate clear pre-requisites, including the need for trained staff, adequate technology support, and transparency in guest screenings. They should dictate the minimum prices that units can lease for — this helps keep away unwanted guests and also helps to keep a check on potential challenges in managing a short-term rental.
In addition, only companies that understand the ethos of building management and its rules should be shortlisted. A tendering process, where the property management firm needs to apply, must also be implemented.
In addition, OAs can charge a fixed fee on vacation management firms, which can even be slightly higher than what they charge full-time residents.
While OAs have to be careful in choosing the right vacation rental firms, it is equally important that holiday homes companies also research about how OAs operate. If you find that a lot of people in a particular residential community are operating short-term rentals that are not in compliance with rules, it’s a sign of an unstable OA.
While it may seem like an opportunity to get in, it’s far more important to consider the stability of the OA and how any future changes could affect the reputation of your company.
In recent years, renting residential units on short term have reaped several benefits for property owners as well as the buildings. It has not only brought the general maintenance costs down, but also ensured that the facilities, which remain unused for most of the year, are in use.
It has created a liquidity in the property market, which has otherwise been quite slow. In addition, a good yielding property in a building increases the value of other properties. That’s not all, high-profile buildings that attract high-profile guests have converted them into potential buyers as well.
Overall, renting on a short-term basis is a great mechanism to generating steady income for the property investor, as well as generate income for the building’s facilities, including restaurants, retail, etc.
When the market keeps experiencing highs and lows, a short-term rental model is a lucrative method to invite investors to purchase properties and earn a sustainable yield.
Vinayak Mahtani is CEO of bnbme.