Dubai: Dubai’s property landlords are increasingly opting to take in travellers staying for five days or more via sourcing platforms offering short-term rental options.
In doing so, it benefits the wider market for short-term stays as brand new apartments and villas are being used, rather than sitting empty before a full-year tenant shows up.
Vinayak Mahtani, CEO of recently-formed holiday home management company, bnbme, said: “A studio could be rented for $70 a day and a villa for $1,000. It’s a misconception that holiday homes are cheaper than hotels — it ultimately depends on what you plan to offer the stays with.”
Bnbme specialises in the upper tier of short-stay vacations, with under 30 properties in its portfolio. This includes access to some of the Fairmont residences on the Palm and Mahtani plans to add an additional 15-20 properties to that portfolio by the end of the year.
Mahtani said: “The type of demand depends on where the property is. On the Palm, 90 per cent of the short-stay demand is generated from tourists. And even from within the UAE, from families wanting a bit of a getaway spot but without leaving the emirate. Some of the villas are booked for the private pools and family gatherings.
“At JLT (Jumeirah Lake Towers, demand generation is 80 per cent from those here on work-related purposes or new employees still searching for a permanent accommodation in the city. These stays tend to average a couple of weeks.
“At the Downtown, another popular spot for a slightly premium short-stay, demand type is 50:50 between tourist and business traveller,” he added.
Manika Dhama, Associate Partner at the consultancy Cavendish Maxwell, said: “The trend of short-term rentals has improved since the revised regulations from DTCM (Dubai Tourism & Commerce Marketing) in 2016 on holiday homes, which allowed individual home owners to work directly with DTCM rather than through operators.
“At the end of 2016, DTCM had announced that more than 1,800 such units had been approved and were operational.
“Lease term with tourists mirrors the average length of stay within the wider hospitality offerings in Dubai, which is around 3.5 days. Other longer terms of about a week or more also exist, and these are usually from new entrants to the job market who’re awaiting their permits and papers before moving into regular residential accommodation,” she added.
Dhama said she believed this category could expect even better days all through the run up to Expo 2020 in Dubai. Individual owners could either place their units with existing operators or get individual licenses from DTCM.
Mahtani said seasonality was important when it came to targeting the pleasure-seeking clientele who want enhanced experiences that provide more than what a hotel stay can offer.
He said: “In recent weeks, the demand was from the Chinese, with the autumn festival on, and next few weeks will see demand from India ahead of Diwali. Then the peak season beckons with Europe being the most likely source of demand from November through January.”
Mahtani’s firm may not directly own any of the properties in its portfolio but Mahtani said it did business with multiple sourcing portals, not just Airbnb.
For landlords it is both a measure of reducing void periods and netting higher overall returns, even with the set-up costs involved.
Dhama said: “This could include service charges, utilities, annual maintenance fees, DTCM and building management fees, insurance, supplies, operator fees (20 per cent of rental), furnishing and marketing costs.
“While the calculation of net returns varies for each building and apartment type, the comparison is between all the above costs against the chargeable hotel rate per night, assuming around 60-65 per cent occupancy in the current market.
“In popular locations and buildings where this expected net income is higher than the annual rent for a regular apartment, landlords can choose the short-term rental option,” she said.
