Dubai holiday homes sector sees boom as investors report 20% higher returns over traditional leases; best areas revealed

The Dubai holiday homes sector is experiencing a boom. Demand has increased by 30 per cent compared to this time last year. Industry experts claim that the trend is revolutionizing the region’s real estate scene. It offers remarkable returns for savvy property owners. It also provides attractive accommodation options to visitors.

Myles Rothwell, Managing Director at Edwards and Towers, said: “Over the past year, Dubai holiday homes have surged. Bookings have increased by 30 per cent due to rising tourism. There is also a demand for flexible living options.

Short-term rentals 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.”

Cherif Sleiman, Chief Revenue Officer at Property Finder, said: “When searching for an ideal short-term rental, thorough research is crucial. Our recent white paper, titled ‘Opening Doors: Insights, Trends and Forecasts for Real Estate in the UAE’, reveals key insights. For instance, most short-term renters with families prefer lifestyle-oriented communities. They look for vibrant assets and good connectivity.

“While consumers seek unique experiences curated by diverse hosts, investors have an opportunity. They can select properties that promise the best returns. The growth of short-term rentals is a thrilling development within the real estate sector. We look ahead to its continued success”.

Beyond the increase in demand, certain areas are gaining fame. They are known for the Dubai holiday homes options they offer.

One of the leading holiday home rental companies in Dubai, highlights popular areas, including:

• Business Bay
• Arjan
• Jumeirah Village Circle
• Downtown Dubai
• Palm Jumeirah
• DAMAC Hills

These locations offer a blend of world-class amenities and trendy communities. They give unique experiences and effortless access to the city’s attractions.

Anthony said: “In recent years, Dubai has become a luxury travel destination. Visitors are willing to pay more for high-end accommodations. A significant trend is that families and groups prefer larger holiday homes over multiple hotel rooms. This preference drives 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 provides landlords with lucrative opportunities. They can achieve both 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”.

As cooler months approach, the city gears up for a surge in visitors with diverse tastes and preferences. Staying aware of these needs is crucial for investors. They aim to maximize a property’s value in this segment.

Nina Klishevich, General Manager, Blueground, said: “Dubai’s short-term rental market is experiencing rapid growth, with new operators entering the scene. Still, 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 expect a wave of consolidation. Some operators will scale up to manage 100-plus units. Others exit the market. We can also expect tighter government regulations to guarantee 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”.

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: Make sure 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 improve their operations
• Sustainability Initiatives: Promoting eco-friendly practices within the short-term rental sector, like 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, like Property Finder to showcase your short-term rental to a global audience. Property Finder also offers advanced services, like Data Guru, offering in-depth insights into community trends, neighborhood specifics, and pricing, helping you make informed investment decisions