What you need to know about Dubai's booming holiday rental market

Tourism in Dubai is rocketing, offering a fantastic opportunity for landlords and investors alike in short term rentals. But before diving in, here are some things to consider.

Chances are you know friends or family planning a holiday to Dubai in 2023. You’re not alone – according to the Department of Economy and Tourism (DET), the emirate welcomed a massive 4.67 million tourists in the first three months of the year alone. This has led to a 58% increase in active short term rentals compared to the same period last year.

In fact, the 2023 World’s Best Cities Report ranked Dubai as the best city in the region to live, work, invest, and visit. This situation now offers a great opportunity for landlords who can earn around 20 to 30% more profit by renting out their home to holidaymakers than with long term leasing (depending on the area).

Another upside is they also get to use their homes in between tenants and fluctuate the prices according to the market conditions and season.

However, as this lucrative market evolves there are a few important new Dubai real estate initiatives that have popped up – as well as unique aspects of the overall market you need to think about.

There’s a new QR code initiative

The DET recently launched a new initiative for holiday homes. Dubai landlords will now be required to show a QR code on the main entrances of their short term properties.

Guests can scan the code and access essential information about the operator of the holiday home and contact details of the DET. This will also facilitate inspections conducted by the Dubai Corporation for Consumer Protection and Fair Trade.

There’s also a new 'Rent Now Pay Later' scheme

Could this be the end of rental cheques? Digital real estate investment management platform Keyper announced a Rent Now Pay Later (RNPL) service, launching in July 2023. Dubai tenants will be able to pay their annual rent in monthly instalments using a credit card, an initiative that aims to bring more financial ease to residents.

This may mean a decrease in demand for the short term rental market, as one of the main reasons why relocating expats choose holiday homes is because of the payment flexibility.

That being said, the RNPL scheme will only be available for UAE residents – so holidaymakers, travellers and those waiting for their visa will likely stick to a holiday stay instead.

Don’t forget about seasonality

This might not be news to some, but it's important to mention the impact of seasons in Dubai's short term rental market. There's usually less tenant demand for holiday homes during the summer months, but that doesn't mean the sector goes quiet.

"Our low season is from May to August. However, we still see things picking up in August due to families relocating before the kids go back to school," said Emma Campbell, Short Term Leasing Director at haus & haus.

"We also have small peaks in the summer when travellers from local GCC countries flock to Dubai for national holidays. Once winter comes, Christmas and New Year are always the busiest times," she added.

All eyes will be on Dubai this November for Cop28

One of the world's biggest climate events will take place in Dubai's Expo City later this year, following up on Cop21 in Paris where all countries in the world agreed to set targets for cutting emissions.

The global occasion will welcome more than 140 heads of state and government and 80,000 participants. "The UAE's hosting of Cop28 will be the most prominent event for the country in 2023," said HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

This event is already turning many heads towards the emirate of Cop28 attendants and tourists looking to experience the city's sun-kissed winter – so it's expected to bring a significant boost to the short term rental market.

Off plan launches are having a major impact

With new developments launching almost every week, Dubai's off plan projects continue to boost the emirate's real estate market. "With the ongoing construction of new buildings and properties, clients have more options for their stay which pushes the competition even further," Campbell notes. "They will generally want to be in these new projects with nice facilities, and this certainly reflects in the short term rental market".

The undergoing constructions include the giant Palm Jebel Ali and Al Habtoor Tower, the world's largest residential building.