Short-term rental market set for recovery

Ajay Bhatia is the Founder and CEO of SOL Properties, established in the UAE in 2013. Bhatia is responsible for the strategic direction and overall management of the company. Leveraging deep industry expertise, and longstanding partnerships, Bhatia leads SOL Properties in pursuit of new development opportunities, corporate acquisitions and financing activities across all business platforms.

Regulatory reforms and changing market conditions catalyse an influx of visitors flooding to Dubai in the second half of the year

  

Dubai’s short-term rental market is evolving to meet the needs of tourists and professionals.

Most of us have heard reports of foreign nationals sitting out the pandemic in Dubai while continuing to work remotely. To legalise the status of these workers and in an effort to attract more of them, the government has created a Remote Work Visa.

This allows individuals to live and work in the UAE for one year, without a local sponsor, regardless of where their employer is based. Those who apply will have to pay for their own health insurance, but at just $611 the offer is likely to prove very attractive to those considering a working holiday. Remote Visa holders will be able to sponsor their families, and anyone who comes on a standard tourism visa and decides they want to stay can transfer to the one-year programme once in the country.

Another key development for the short-term rental market is the ongoing vaccination programme in Europe. The UK has already administered at least one dose to more than 50% of its adult population. The chief executive of BioNTech, which led development of the Pfizer vaccine, recently predicted that Europe could achieve herd immunity in August. Herd immunity is the point at which enough people are vaccinated – typically around 70% of the population – to effectively halt the spread of a disease. At that point, these key source markets can be expected to start opening up again.

This will inevitably boost attendance at Expo 2020, which is scheduled to go ahead as planned in Dubai towards the end of this year. As more countries achieve herd immunity and air links reopen, the more people will be able to attend the event, which officially attracted 22.2 million visitors in 2015 when held in Milan. Expo takes place over a six-month period, making short-term lets an ideal option for those who will be here for some or all of that period.

For visitors to Dubai, the appeal of short-term lets is clear. Hotels might be attractive and more preferable for a short visit, but costs quickly mount up and the combination of room service and eating out becomes tiresome after a few days. Those on longer term stays inevitably want to feel ‘at home’, which means settling down in a place and having access to amenities such as a kitchen and washing machine.

For owners, short-term lets are an attractive option in a healthy market. The highly adaptive offering will balance periods of high and low demand with a pricing model delivering returns of over 30% more compared with annual tenancies.

For owners letting short term, there are some important things to consider. Units will need to be furnished and equipped, and owners will most likely have to be responsible for payment of utility bills. As these can be highly variable, pricing must be exactly right with careful consideration given to peak consumption levels in the warmer months.

Owners are advised to use a letting agent, which should be a reputable name operating with complete transparency, particularly with respect to fees and commissions. It is also essential that owners comply with all laws and regulations related to short-term lets, which are regulated by Dubai Tourism and Commerce Marketing (DTCM). Owners letting units directly must register with DTCM, or have their letting agent do it for them.

Prospects for the short-term rental market look positive. The new Remote Visa, successful vaccination programmes and Expo 2020 are just a few catalysts that will see visitors flock to Dubai in the second half of the year, providing a steady stream of tenants for short term rental offerings.

© Opinion 2021

Any opinions expressed in this article are the author’s own

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