Dubai: As expected, holiday home rents in Dubai for the New Year are out to set new highs, with some properties on the Palm Jumeirah fetching around Dh60,000 (4-bedroom villa on the frond) for stays between December 30 to January 2.
Rates could go even higher as property owners await some last-minute bookings, and for which they could charge a premium.
Also, this year, holiday homes in Sharjah and Abu Dhabi are coming to the New year’s party, with laws now in place that allows landlords to offer short-stay options.
“As always, the absolute highest rates in Dubai are during the NY period,” said Anna Skigin, founder of Frank Porter, the Airbnb management company. “This year it will be especially felt. We anticipate the highest rates going into January.”
More on rent trends
- Dubai home rent increases could cool if 'star rating' for buildings determines Rental Index
- Dubai could revise Rental Index to reflect state of individual buildings than based on area trends
- In Dubai, new 1-year rental listings drop as landlords chase short-term rentals
- In Abu Dhabi, rents in affordable residential locations remain unchanged
Doha World Cup sets it up nicely
As for property owners active in the holiday home/short stay space, demand during the final week of 2022 - and the first few days of 2023 - is an extension of an unprecedented run of sustained demand. It started on or around November 18, when football fans turned up for stays in the UAE in between their match trips to Doha for the World Cup. (Top-of-the-line Palm villas were renting at Dh20,520 on average during December 16-19, coinciding with the final days of the Doha event.)
The rates at the beginning of the World Cup jumped 15-20 per cent compared to normal seasonal rates.
Now comes the blockbuster New Year phase, and where holiday home rents have seen a further doubling - even higher - gains. It’s all panning out the way that landlords had been hoping for.
“The most enquired-about areas were Dubai Marina and Downtown due to its popularity with tourists and familiarity with travellers,” said Joanna Plunket, the STR Manager for BetterStay. “There were also a lot of World Cup fan zones around the Marina, which proved convenient for visitors wanting to feel immersed in the atmosphere without having to travel to Qatar. “The expectation is that the World Cup will draw further attention and put the spotlight on the short-term rental market.
“It has given people the opportunity to experience the flexibility and comfort of short-term stays as a more suitable alternative in many cases.”
Everyone became aware of the World Cup event and its close proximity to Dubai, and this has led investors to consider short-term rentals where, maybe, they wouldn't have been aware of it as an option previously.
Win-win for landlords
“Their decision to keep their properties in the short-stay rental market has paid off handsomely,” said an estate agent. “Many of them would by now have generated returns higher than what they would have got for the same property if it had been placed for a one-year rental.
“And this even as rents on one-year contracts in Dubai recorded 20-30 per cent increases. 2022 has been the year for landlords.”
Possibilities open up for Sharjah, Abu Dhabi
It’s still early days for the holiday home concept in Sharjah and Abu Dhabi, but market sources say there was ample activity during the World Cup phase. Both emirates now have clearly defined rules on how landlords/property owners should operate in the short stay leasing space and how the interests of tenants should be taken care of.
“Abu Dhabi rates are about 40 per cent lower than Dubai on average,” said Anna. "Sharjah rates are currently 50 per cent lower than Dubai on average - but it's worth noting that both markets are in the growing phase, so the rate difference between them will get closer over time."
Boost to short-stay capacity
It could be a year or two before sufficient short-stay capacity becomes available in these two emirates. For that to happen, more homes will need to be delivered, and which their owners can then repurpose for the short-stay market. Plus, there will need to be supporting factors in play - such as mega-events or a series of scheduled ones - that can feed constant demand for short lets.
This is where Abu Dhabi’s ongoing focus to develop a busy events and conferences calendar will be quite helpful. But the onus will be on the landlord as to which option he chooses - the one-year lease or the short stay.
Dubai’s short-stay market has evolved over 4-5 years, and there was also a disruption during 2020 because of the pandemic. “This is why 2022 has been such a breakthrough year - Dubai’s holiday home market has more than compensated for 2020,” said a landlord who has five properties in the Airbnb space and all of which are booked in full until January 15 next.
By the looks of it, 2023 could prove just as robust.
This is a follow up on the Airbnb initiative - ‘Live and Work Anywhere’ - from earlier this year, where the listings company identified the ‘most remote worker-friendly destinations in the world’.
Dubai was one of 20 chosen destinations alongside the likes of Thailand, the Caribbean, and the Canary Islands.
The Live and Work Anywhere programme will see Airbnb and Dubai’s Department of Economy and Tourism promote the city to remote workers seeking accommodation and guidance for their long-term stays.
“The holiday home supply in Dubai has grown by over 100 per cent in the past 12 months,” said Vinayak Mahtani, CEO of bnbme holiday homes. “Collectively, we all need to now focus on building the demand to ensure we don’t end up with oversupply.
We will be working closely with Airbnb and other platforms to offer longer stays with services, which may include daily cleaning, breakfast, office setups, executive assistance, and chauffeurs. This will attract a different kind of guest - you cannot have a better location than Dubai for remote working.