Demand for short-term lets in Dubai growing '10 times faster' than for hotels

Demand for short-term lets in Dubai is significantly outstripping that for hotels, a new report has found, as holidaymakers look for better deals and home comforts during their stay.

In a city famed for its dazzling hotels, travellers are increasingly searching for private apartments and villas.

A report by market analysts Air DNA recorded growth of almost 70 per cent in short-term rentals between June 2018 to June 2019.

Demand for hotels during the same period grew by a more modest 7 per cent, according to the report.

Vacation homes nationwide have generated $136.7 million during the same 12-month period as demand continued to grow - though that remains small compared to a Dubai hotel market worth billions of dollars.

“The quality of apartments has improved as have the services on offer,” said Vinayak Mahtani, chief executive of Bnb ME, which manages and maintains short-term rents for owners.

“Property owners have more confidence in the properties doing better than in the long term, so better value properties are coming on the market.”

The growth of the market was in the spotlight last week when Emaar launched its own short-term letting platform Ease. It also banned homeowners in Downtown from privately renting their own properties out as of September 19, saying some are being used for "non-residential and non-family-related activities".

Dubai Tourism then reminded owners in a circular this week that they need a permit to rent out homes commercially and warned against advertising online without one. Major cities around the world have had to act in the face of rapid and at times unregulated growth of short-term let markets.

Mr Mahtani said the industry is in favour tightening of regulations and while "there is a lot of red tape when it comes to checking in a guest in Dubai,” it will ensure a level of quality is maintained.

“If the government can both control the playing field and give the holiday home operators a fair chance, then I see the industry growing.”

In many cities short-term lets are seen as cheaper than local hotels, but Dubai is ranked the fifth most expensive place in the world to rent a holiday home, according to a Bloomberg index last year.

On average owners asked for $185 (Dh680) per night, though travellers would typically have more space than a single hotel room. Miami and Boston took the top spot charging $205 and $195 a night, respectively.

Air DNA's more recent survey placed it higher, at $202 (Dh741) per night, with Dubai Marina, Downtown Dubai - before the ban - and Palm Jumeirah most popular.

With greater costs comes greater expectations.

“A guest visiting Dubai is expecting nothing but the best, whether it’s a luxury hotel or holiday home,” Mr Mahtani said.

“In Europe I have stayed in a holiday home where I was asked to ensure I cleaned the dishes before leaving the property.

“That would be unheard of in Dubai.”

The most expensive Dubai rentals are in Palm Jumeirah with an average daily rate of $500.

The largest proportion of international vacation rental guests to Dubai come from London.

Despite the potential for short-term lets to take business from hotels, it remains a relatively small market.

“Obviously anyone who is providing rental accommodation is a competitor,” said David Allan, cluster general manager of Radisson Blu Dubai Waterfront and Radisson Resort Ras Al Khaimah.

“However, I’ve had no feedback that indicates it is having a negative impact.”

Nila Pendarovksi, manager of Rove Hotel Dubai Marina, said hotels still have the edge on service and facilities.“I spoke to a guest recently who said they were considering staying in an Airbnb but opted against it because they wouldn’t get the same services as a hotel,” she said.

“It all really depends what a guest is looking for from their stay.”

Another expert suggested the sheer competition between hotels - 520 properties and 93,000 rooms according to official figures - results in better value for money.

“Quite often the prices of rental homes are way more expensive than hotels,” said Caroline Rowe, director of brand marketing with The First Group, a real estate investor.

“It’s a different market and you don’t always get the full treatment you receive in hotels.”

this article first appeared in The National 13.09.2019