Dubai: ShortTermRentalz speaks to Simon Kennedy, co-founder and CEO of property management company Kennedy Towers, about the reasons for the swell of companies in the Middle East and Dubai and regulatory challenges for the market in the emirate.
- Please introduce yourself, the Kennedy Towers brand and what services you provide in the short-term rental industry.
My name is Simon Kennedy, I am a property entrepreneur with 14 years’ experience in real estate brokerage, valuations, property management and more recently short-term rental management. I am a chartered surveyor with three university degrees including an executive MBA, and my portfolio includes ten companies in Dubai, Abu Dhabi, Marbella and London. I am co-founder & CEO of Kennedy Towers, Dubai’s largest short term rental operator, which we founded in 2015 and have since expanded into Spain and the UK. We work on a management fee model where we onboard a client’s property to our standards and then lease / manage for the period of the agreement.
- What marks Kennedy Towers out from its competitors in the Dubai short-term rental space?
We have always differentiated through the quality of service and the high standard of property we onboard. We operate a blend of medium- and short-term leases — from three days to three months — while juggling local supply-demand dynamics, seasonality, unit type and regulations in the city. We tailor our strategy to each specific unit type — whether it is a studio apartment in DIFC or six-bedroom luxury villa on the Palm — to maximise the returns for property owners. We use technology to optimise our booking system and also our internal operations to ensure that everything works a efficiently as possible.
- Since launching in 2015, you announced earlier this year that your property portfolio had reached over 1 billion AED in value – why is there a swell of short-term rental companies emerging in the Middle East and Dubai?
Short-term rental management is still a relatively young industry in Dubai; we were the first company to obtain our licence to do the activity in Dubai when the law was passed – before this it was illegal. Having the advantage of being one of the early starters, and also having a strong relationship with partner real estate brokerage Edwards & Towers, we were able to scale rapidly. There are now more competitors entering the market, both locally and from overseas, who are adjusting to the strict regulation and regular property inspections by the authorities, which does not happen in most other markets.
- What is attracting investors to invest in these companies?
We are fortunate to be self-funded, and this has given us the freedom to grow in a sustainable way and not rush to bring on too many units without much thought of the impact on occupancy rates and guest experience. However, many of our competitors in Dubai have received funding, and we have been approached many times in this regard. The feedback from investors is that they like the high margins, strong cash flow and flexibility of the business. Also, by focusing on individual units, we have hundreds of clients in our portfolio which is de-risked, rather than having hundreds of units in one building from one client.
- You opened an office in Marbella in Spain last year – what are your plans for further expansion in the coming years?
We are currently growing our London operation, where we are differentiating through our use of our corporate booking network. Big companies like to book our properties because we onboard high quality properties using the standards we have learnt in Dubai, which are actually quite rare in London. We can therefore convince landlords to make minor upgrades to their properties which make a huge difference in the income we can generate on their behalf. Later this year, I will be going to Madrid to expand our Spanish operation to the capital city, and next year we are targeting two additional European cities and our first Asian city.
- Are you noticing any trends emerging in terms of consumer behaviour in the rental space in Dubai and what guests are asking for as part of their stay?
In Dubai, over 70 per cent of our bookings are corporate guests who are in Dubai on temporary work assignments, who stay for one-three months. As we focus on the prime areas, the guests are normally senior executives who require high quality accommodation. Fortunately for us, most of the buildings in Dubai have their own gym and pool, which is a major bonus compared to many global cities. One requirement we are seeing more frequently in Dubai is for a pet-friendly property; in Dubai there are not many buildings where pets are allowed so we are seeing a large premium paid by some guests to be able to bring their pooch.
- What challenges / opportunities do you think lie in wait for operators in the Dubai rental market and can they all continue to flourish?
We see a big challenge in the area of regulation, due to many press rumours regarding restrictions on the location and number of licensed units. The government are very supportive of the activity amidst the backdrop of growing the tourism business, but some developers are trying to prevent the activity in their buildings. However, I think there are also great opportunities – next year Dubai will hold Expo 2020 which will bring a large number of temporary visitors to the city, and therefore a strong demand for short-term rental units.
For more information, visit the Kennedy Towers website here.