August 30, 2021
“List your property as a holiday home” dwells upon today’s reality behind short rentals in the Dubai market.
Many homeowners find themselves traveling for business on a regular basis, leaving an empty apartment behind. A great way to earn additional income is to list your property as a short rental holiday home. UAE legislation stipulates that building management companies cannot prevent owners from converting their property into a holiday home. Unless your sale and purchase agreement indicates otherwise, you are at full liberty to make this decision.
However, if you decide to explore this opportunity, you must first obtain a license from DTCM – Dubai Tourism. Alternatively, the cheaper option is to use a holiday home management company in order to get licensed. So, once you get licensed you can start listing your property on platforms such as Airbnb or holiday homes. They usually charge a percentage fee of 15% or 17% but will take care of everything for you. For example, the holiday home company will advertise the property and cover all paperwork related to the leasing process. Moreso, they will handle check-in and check-out timings as well as cleaning after the guests. Basically, all the running costs including Dewa and service charges will be handled by the management company.
If you are the owner of a studio or one-to-four-bedroom property, you will be paying up to AED 1,200 licensing fee a year. You also need to renew the license each year. Before the owners get to fully enjoy the positive return on investment from the short rentals, they need to comply with all regulations
List your property as a holiday home – For instance, the property must come fully furnished with an available connection to the internet and DEWA. The owner needs to have full insurance on the property and be ready to clean and sanitize the premises after each guest. Additional costs might add up with maintenance fees, advertising fees, and guest amenities. Similarly, owners need to pay AED 15 a day for each guest during their stay. This represents the Tourism Dirham Fee, paid monthly to DTCM. However, the holiday home operator usually covers the Tourism fee. Furthermore, tenants cannot short let your property without your written consent. As an owner you must sign and submit a no-objection certificate to DTCM, allowing your tenant to short let.
DTCM provides a full list of items that your property needs to display, in order to comply with conditions for short rentals. For example, you need to furnish the property with quality items, provide a TV set, kettle and curtains.
If you deliver on your promises and observe the government regulations and high standards for short rentals, you will definitely reap the rewards.
The short-term rental market will definitely see a surge in demand when Expo 2020 kicks off soon. UAE will attract a massive influx of visitors and tourists to the country.
Many short-term rental businesses are already expanding their operations to cater to the demand. They are acquiring a fresh portfolio of properties to cater to all needs and budgets. From luxury properties, high-end, or mid-market, Dubai has the supply to match the demand. The current market offers attractive opportunities to owners and businesses engaging in holiday rentals. With Expo 2020 bringing a huge number of visitors into the country, short-term occupancy will exceed any previous records. Expo 2020 positions Dubai as a global catalyst for tourism, trade, and logistics, ready to welcome over 25 million visitors to the event. Dubai’s short-term accommodation market will need to deliver the highest standards of services and facilities, to grow and advance its reputable reputation.
Travelers and tenants are looking to benefit from more value for money, privacy, more space, and resort living standards. Therefore, they veer towards holidays homes and more flexible leases.
Short-term lets generate high ROI, apparently even higher than long-term rentals. According to Anna Skigin, CEO and founder of Frank Porter, renting a property short-term over three years “gives a return of 20-40 percent higher than long-term” However, each area of Dubai will generate a different rate of return on investment. Additionally, holiday seasons such as Christmas or Eid are very good boosters for the short rental industry. Residents switching to monthly rentals for more flexibility also improved capitalizing on short-term rentals.
Downtown Dubai, Dubai Marina, and Palm Jumeirah fetch some of the highest prices for short-term rentals.
The average price for a studio or one-bedroom residence starts at AED 350, a night and up to AED 3,000 per night for a five-bedroom villa. Similarly, if you opt for monthly rental, expect to pay around AED 3500 for a furnished studio and AED 4,800 for one bedroom.
If there is a downside to the holiday homes, it has to be the additional cost for maintenance and repairs that the owners have to bear. However, the cost and damages could be minimized, especially where your personal belongings coming into the picture. Many fear renting out short-term because of damage to their personal items. Therefore, you need to consider having a storage unit, where you can safely deposit your belongings. Alternatively, you can reserve certain areas inside your home where you can lock away private stuff, for your peace of mind.
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