UAE: short-term rentals set for 20% increased returns

The UAE's short-term rental market is witnessing a surge in popularity as a lucrative second income option for residents.

UAE Short-Term Rentals

Despite facing setbacks during the 2020 pandemic, the market rebounded swiftly due to increased travel post-Covid-19, a phenomenon often referred to as 'revenge travel'. Anna Skigin, CEO of Frank Porter, noted that short-term rentals offer higher returns and flexibility, providing property owners with complete control over their assets. Compared to long-term rentals, short-term lets yield approximately 20% higher returns over a two- to five-year period.

Skigin highlighted a trend where new property owners in Dubai immediately opt for short-term rentals upon entering the real estate market. Additionally, existing property owners are selling units with short-term rental potential, considering it a selling point. The short-term rental model consistently generates income, according to Skigin, benefiting owners who have engaged in it for several years.

Many property buyers, particularly in Dubai, are listing their assets for short-term rentals to capitalize on the rising rental market. Growing tourist numbers further support this trend, with Dubai witnessing a record 17.15 million international overnight visitors in 2023, a 19.4% increase from the previous year. Key areas like Dubai Marina, JBR, Palm Jumeirah, and Downtown offer high returns per night, while emerging areas like JLT, JVC, and Maydan are also becoming lucrative.

According to Laura Adams, sales director at Provident Real Estate, the increase in rentals in Dubai was caused by a combination of factors, including the recovery from the pandemic and a move towards short-term leasing as a strategy to increase profits.

Rents have been steadily rising over the last three years, and real estate transactions have hit historic highs. After seeing a 15% rise in January and February figures compared to 2023, Skigin voiced confidence about the future of 2024. The expanding market for short-term rentals in other emirates, such as Ras Al Khaimah and Abu Dhabi, was another trend she brought up.

Skigin emphasized the continuation of longer stays, with individuals opting to work from their holiday rentals. She also viewed initiatives like the single GCC tourist visa positively, expecting them to further bolster the market.

Read also: UAE announces new Golden Visa rules, boosting the Dubai real estate sector

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