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Demand for short term rentals soars in Dubai

Trend is revolutionising the region’s real estate scene

Short term rentals in Dubai are reshaping the rental market, with a 30 per cent increase in demand compared to this time last year, data shows.

Industry experts say that the trend is revolutionising the region’s real estate scene, offering strong returns for savvy property owners, and attractive accommodation options to visitors.

“Over the past year, we have seen short-term rentals in Dubai surge, with a 30 per cent increase in bookings due to rising tourism and a demand for flexible living options,’ explains Myles Rothwell, Managing Director at Edwards and Towers, a leading real estate brokerage and surveying practice in Dubai. “This has led to investor returns up to 20 per cent higher than traditional leases. In comparison, long-term rentals offer steady income, maintaining an average annual yield of 7 per cent.”

“When searching for an ideal short-term rental, thorough research is crucial,” says Cherif Sleiman, chief revenue officer at Property Finder, a major regional property portal. “Our recent white paper, titled Opening Doors: Insights, Trends and Forecasts for Real Estate in the UAE, reveals that most short-term renters with families for example, prefer lifestyle-oriented communities with vibrant assets and good connectivity. While consumers seek unique experiences curated by diverse hosts, for investors, this is an opportunity to select properties that promise the best returns. Indeed, the growth of short-term rentals is a thrilling development within the real estate sector, and we look forward to its continued success,” he adds.

Beyond the increase in demand, there are specific areas which are becoming more well known for the short term rental options they offer. Anthony Joseph Abou Jaoude, Founder and CEO of Primestay, one of the leading holiday home rental companies in Dubai, highlights that areas such as Business Bay, Arjan, Jumeirah Village Circle, Downtown Dubai, Palm Jumeirah, and Damac Hills are particularly popular. These vibrant locales offer a rich blend of world-class amenities and trendy communities, providing unique experiences and effortless access to the city’s attractions.

“In recent years, Dubai has become a luxury travel destination, with visitors willing to pay more for high-end accommodations. A significant trend is that families and groups prefer larger holiday homes over multiple hotel rooms, driving up the demand for vacation villas and spacious apartments for short-term rentals. In early 2023 up to date 2024, Dubai’s rising demand for short-term rentals presents landlords with lucrative opportunities for high occupancy rates and attractive rental yields. Dubai’s vibrant tourism scene ensures strong demand for short-term rentals, offering landlords and investors a steady and profitable income stream,” Anthony adds.

As winter approaches, the city gears up for a surge in visitors with diverse tastes and preferences. Keeping a finger on the pulse of these needs is critical for investors looking to maximise a property’s value in this segment.

“Dubai’s short-term rental market is experiencing rapid growth, with new operators entering the scene. However, the market remains fragmented, with the top five companies making up less than 10 per cent of the offerings. Over the next one-two years, I anticipate a wave of consolidation, with some operators scaling up to manage 100+ units, while others may exit the market. We can also expect tighter government regulations to ensure compliance with licensing and guidelines. Additionally, technological advancements like AI-driven tools and smart home features will enhance both guest experiences and operational efficiency. Finally, as remote work becomes more prevalent, we foresee a growing demand from digital nomads seeking flexible, short-term accommodations,” says Nina Klishevich, General Manager, Blueground, operator of the largest, curated network of furnished rentals globally.

With strong potential returns in mind, short-term rental offerings need to be well suited to both regulatory and consumer requirements. Key points for investors to bear in mind when catering to the segment include:

Regulatory Clarity and Compliance: Ensure you have clarity around all the regulatory processes involved, with a focus on health and safety, quality protocols and consumer protection measures.

Technology integration: Find new ways to make your living space hyper convenient and connected for your potential tenant by deploying smart home devices that can enhance guest experiences and help hosts optimize their operations.

Sustainability Initiatives: Promoting eco-friendly practices within the short-term rental sector, such as using energy-efficient appliances and sustainable building materials, aligns with broader environmental goals and attracts eco-conscious travelers.

Trusted platforms: Use trusted property search platforms to showcase your short-term rental to a global audience.