Short-Term Rentals Yield 20% Higher Returns for UAE Property Owners

Short-term rentals are becoming a prominent secondary income for residents of the United Arab Emirates, offering increased demand and substantially higher returns – Industry experts report that numerous first-time property owners are entering the market by listing their properties for short-term rentals to generate additional income.

The short-term rental sector, like many others, experienced a downturn during the 2020 coronavirus pandemic but saw a rapid recovery due to the surge in ‘revenge travel’ post-COVID-19.

Anna Skigin, founder and CEO of Frank Porter, a company specialising in Airbnb Management Services, stated that short-term rentals have become a vital alternative income source for Emirati and expatriate property owners. “We are observing newcomers to the Dubai real estate market immediately opting for short-term rentals. Additionally, some of our clients are selling their properties to new buyers, making short-term rental potential a key selling point,” said Skigin, who holds Russian and Canadian citizenship.

Skigin further noted that short-term rentals consistently generate income, a trend observed among most clients over the past two to three years.

Many property buyers in the UAE, particularly in Dubai, have listed their properties for short-term rentals on various online platforms to capitalise on the increasing rental rates.

The growth in tourist numbers in Dubai and the wider UAE also bolstered the short-term rental market. According to recent data from Dubai’s Department of Economy and Tourism (DET), the emirate welcomed a record 17.15 million international overnight visitors in 2023, a significant 19.4% increase from the 14.36 million visitors in the previous year, surpassing the previous record of 16.73 million set in 2019.

Skigin highlighted that Dubai Marina, Jumeirah Beach Residence (JBR), Palm Jumeirah, and Downtown Dubai offer the highest nightly rates. However, she pointed out that the best returns on investment (RoIs) are only sometimes in the most expensive areas, with Jumeirah Lake Towers (JLT), Jumeirah Village Circle (JVC), and the upcoming Maydan area also offering high.

In the past three years, rental rates have consistently increased and doubled, and property transactions have reached record highs, pushing property prices to unprecedented levels.

Looking ahead, Skigin expressed optimism for the short-term rental market in 2024. “The market performed well in 2023, with a resurgence in travel post-Covid-19. Although it’s still early, our January and February numbers are already 15% above those of 2023. We expect this trend to continue as travel fully rebounds,” she said.

Skigin also highlighted emerging trends, such as the rapid growth of the short-term rental market in other emirates like Abu Dhabi and Ras Al Khaimah. She noted that extended stays are becoming more common, with people ‘working from’ their holiday rentals.

She added that upcoming initiatives, such as the single GCC tourist visa, are expected to impact the market positively.