Why short-term rentals in Dubai are a great investment

Have you wondered why short-term rentals in Dubai are a great investment? Anna Skigin, CEO and Founder of Frank Porter shares her thoughts as to why it is!

When deciding where to put your money in the immediate future, the property market in Dubai is a safe bet. More and more expats are choosing mortgages over long term rental options, thanks to the availability of Golden Visas and the attraction of the lifestyle. The population is increasing, and tourism numbers are surging, bringing more inventory on to the market.?

But while the real estate boom in Dubai shows no signs of slowing down and prime opportunities in both the new build and secondary markets come online, it is the short-term rental market where the opportunity really lies, and here is why:?

Flexibility?

Short-term lets give owners complete freedom over their assets. It’s a dynamic business model which doesn’t tie landlords into long rental contracts and gives them the opportunity to pivot easily according to demand and market conditions. In fact, the short-term rental market provides on average a 20 per cent higher return than long-term rentals - over a two-to five-year time frame. Long term lets and other types of investment such as bonds and stocks tend to be more rigid and have a lower level of flexibility.?

Higher ROI

A survey conducted by UK-based landlord insurance company, CIA Landlords, found that Dubai was the most profitable Airbnb city in the world in 2022, provided owners purchased properties near Burj Khalifa (the world’s tallest building). According to CIA Landlords, they can earn an average of ￡930 per night and therefore break even on their investment in just four months.?

The areas which provide the highest rate per night in short term rentals are Dubai Marina, Jumeirah Beach Residence (JBR), Palm Jumeirah and Downtown Dubai. But because the property values are so high, that they don’t always offer the biggest returns. Some of the best ROI comes from areas such as Jumeirah Lake Towers (JLT) and Jumeirah Village Circle (JVC) but the accommodation options here attract a different type of client. In Dubai we are lucky that we have a real cross section of visitors from all over the world with different budgets and reasons for being here.

Tourism and population growth?

Figures released by Dubai Tourism noted that from January to July 2024, the city welcomed over 10.6 million overnight visitors, an 8% increase compared to the previous year. It is also noted that in the first three months of 2024 the population of Dubai grew by over 25,700 residents, taking the total to 3.6 million, according to Dubai Statistics Centre. The short-term rental market has seen a big uptake since the pandemic with people looking for longer stays, flexibility, privacy and the experience of ‘living like a local’.?

Risk vs reward?

Some property owners will be slightly apprehensive before they delve into the short-term market about whether their house or apartment will sit vacant for long periods of time. This is also a risk you take as a landlord of long-term rentals. If you employ the right management company with the right expertise, maintaining occupancy rates is a breeze. Think about peak periods such as New Year’s Eve and all the huge events which are coming to Dubai over the coming months. Short term rentals are a very lucrative investment during these periods and in the ‘quieter’ times, a management company can adjust pricing and marketing accordingly to ensure your investment does not sit idle for long.?

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To ensure you maximise your investment, I would recommend finding the right management company who can help you bring down your operational costs from cleaning, providing amenities and add-on services, plus marketing and managing bookings. It’s all about striking the balance between offering a premium service in a way that is viable to your personal situation and companies such as Frank Porter can help take the pressure off.?