While a change in government policy in 2016 has opened the lucrative short-term holiday home market to private homeowners, it has also led to a surge in holiday home management companies such as Frank Porter and bnbme that have paved the way for a new wave of investors.
“Dubai has only recently legalised the holiday home operator business through the Department of Tourism. The government has facilitated this by making companies such as us license every property we have and pay the Tourism Dirham tax that hotels also pay,” says Anna Skigin, founder and CEO of Frank Porter. “A lot of our clients live overseas or have lived in Dubai and are moving abroad but still have a property here that they want to come back to for holidays or work.”
Skigin explains that most of her clients do not want long-term tenants; this allows them to use the property and make money during the “nine to 11 months” they’re not around.
Vinayak Mahtani, CEO of bnbme, says price and the dirham’s stability are key investment considerations. “Property prices in the current market are quite affordable,” says Mahtani. “Secondly, the dirham is pegged to the [US] dollar so you don’t have fluctuations in your property valuation like you would elsewhere. Lastly, Dubai is a very attractive tourist destination all year round. Believe it or not, we don’t see a dip in the summer months.”
Holiday home managers have also made things convenient for overseas owners. Mahtani says, “We manage the portfolios of clients based all over the world, from North America to Africa, India, China and Pakistan. We take their property, furnish it and get it ready by listing it on various channels. We also run preemptive maintenance checks, carry out regular servicing and have a housekeeper who does a thorough deep-cleaning every time someone checks out.”
Under a short-term rental set-up, Skigin says it’s much easier to switch to long-term rental or sell the property. “If you have a long-term tenant you can’t ask them to vacate without a long notice period,” she says. “We have clients whose properties are officially being listed on the market for sale but in the meanwhile are allowing us to let it out for them for short term.”
Mahtani believes most types of properties “will do well in Dubai” as a holiday home. He expects yields to be anywhere from 8 per cent to 15 per cent. “There are about 14,000 holiday homes on the market at the minute and hotels are getting nervous and are starting to stand up and take count of them,” he says.
But the market is only going to grow, especially with Expo 2020 on the horizon, says Skigin. “We tell owners to start short-term renting now because ours is a review-based business,” she says. “The more reviews you have, the more people are going to rent your property.”
As for areas favoured by guests, Mahtani advocates the Palm Jumeirah followed by Downtown Dubai. “The Palm attracts a lot of people who want the beach and to be secluded. We have villas on the Palm that do phenomenally well. Downtown is for tourists who want to experience Dubai, so they’ll stay in the heart of the city and have the mall close by.”