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- Short-Term Rentals in Dubai for Investors
Short-term rentals are another profitable option for investing in Dubai real estate. This rental housing provides the owner with a stable high income for almost the entire year. Learn more about short-term rental properties and the necessary licenses shortly.
Contents:
- Short-Term Rental License in Dubai
- Dubai Property Tenants
- Short-Term Rental Income in Dubai
- Professional Management of Short-Term Rentals in Dubai
Short-Term Rental License in Dubai
A prerequisite for an investor who wants to rent out residential real estate for short-term rent is the availability of an appropriate license. The Holiday Home Permit is a license issued by the Department of Tourism and Commerce Marketing (DTCM). It can be of two types: for individuals and operating companies that take all the work with the lease on themselves. It allows you to search for tenants and rent out any residential property at your disposal. The cost of obtaining a license is approximately $400 or 1,500 AED.
You also need a license called a Unit Permit to rent out a particular apartment. Its cost will depend on the number of bedrooms – $80 for each bedroom and another $20 for the housing itself. The Holiday Home Permit allows an investor to rent out up to eight properties on a short-term basis. However, each object requires registration and payment for a new Unit Permit.
To get a Unit Permit, follow these steps:
- Register on the Holiday Homes website.
- Add your property and specify the name of the complex, the number of bedrooms, the area, and the type of property itself.
- Provide the necessary copies of documents: passport, apartment ownership rights, and DEWA accounts.
- Send a request and wait for a response, which takes no more than one day.
- Conveniently pay fees – in cash or by bank transfer.
It is also worth noting that the Unit Permit for each object is valid for a year. After that, you need to re-issue it by paying the fees and sending the documentation for the apartment.
Dubai Property Tenants
Rental housing in Dubai is in high demand both among residents and tourists. Residents who plan to stay in the city for several years are most often looking for long-term rental offers. However, some tenants are interested in renting for only a year or several months.
Short-term rentals in Dubai are popular throughout the tourist season, which runs from October to April. During this period, the weather in the city is the least hot, which attracts a large number of tourists. Not wanting to stay in hotels, they prefer to rent apartments, townhouses, and villas for several days or weeks. Long-term rentals are popular all year round. And it attracts couples and residents who stay to work in Dubai for a long time.
You can find tenants by posting ads on social networks and relevant sites. The most popular sites are Airbnb, Property Finder, and Booking. These sites provide a convenient service for tenants and a wide range of features for property owners. You can also leave the entire process of finding and settling new tenants to special operator companies. They will independently search for tenants using their databases of verified tenants.
Short-Term Rental Income
The average short-term rental income in Dubai is approximately 12%, while long-term rental income is 8%. Seasonality and location of housing play a key role in income levels. The most popular locations are:
Real estate in these areas will enjoy the highest demand among tourists and residents.
The direct responsibilities of the landlord also include small additional costs. The landlord needs to pay for the Internet, utilities, and apartment maintenance. There is also the Tourism Dirham – a tourist tax that applies to daily apartment rentals. For each day of the tenant's stay in the apartment, you must pay $2 per bedroom. If the rental lasts more than a month or the owner lives in the apartment, no tax is charged. The average rental income will be approximately $45,000 per year after deducting all expenses.
Advantages of Short-Term Rental in Dubai
The main advantage of short-term rentals is higher rents. On average, the income from such a lease will be 30% higher than from a long-term one. You can also raise or lower the rental price of your property at any time. In the case of a long-term lease, a contract is concluded between the parties, in which the rent is fixed for two years.
Professional Management of Short-Term Rentals in Dubai
Short-term rentals are a fairly profitable way to generate passive income for investors in Dubai, but they require the constant intervention of the apartment owner. However, there is a way to effectively get rid of all the hassle of managing the apartment, and that’s by entrusting the management of the real estate object to a specialized agency.