AirDXB in AGBI: Landlords benefit as UAE & KSA embrace Airbnb model
First published in Arabian Gulf Business Insight, 12 March 2023
The UAE’s introduction of a remote working visa and Saudi Arabia’s plan to allow residents to rent out rooms in their homes has led to the Gulf embracing the Airbnb model and a boom in the short-term rental sector.
In March 2021 the UAE cabinet introduced a remote work visa, allowing workers to set up residence in the Gulf state while continuing to work for overseas employers.
Room rental platform Airbnb included Dubai when it last year launched its Live and Work Anywhere global initiative.
In December it signed an agreement with the Department of Economy and Tourism to set up the Dubai remote working hub – designed to make it easier for those applying for the remote work visa to find short-term accommodation.
“Dubai is a global leader in facilitating remote working,” said Velma Corcoran, regional lead for Middle East and Africa at Airbnb.
“As this trend continues to accelerate, we want to work together to make it easier for people to enjoy the newfound flexibility to work and travel, and help the city harness the economic benefits of this new type of tourism.”
Dubai recruitment businesses and company set-up firms told AGBI the remote working visa has led to an increase in the number of applicants wishing to open in the emirate.
“With e-visas Dubai aims to create a hassle-free immigration process for professionals by reducing wait time for those looking forward to moving to the region,” said Kunal Fabiani, CEO for the Americas and Africa at company set-up firm Healy Consultants Group.
As a result, short-term letting agencies in the UAE have seen increased demand. Joanna Plunkett, manager of short-term rentals at Betterstay, said growth last year was up around 12.5 percent.
“The popularity of short-term rentals in Dubai has increased significantly, with more and more companies opening up to meet the growing demand,” she said.
“This trend is expected to continue as awareness of the benefits of short-term rentals spreads throughout the UAE, with requests for properties in other Emirates such as Abu Dhabi on the rise.”
Dubai Tourism reported that last year the number of overnight guests reached 14.36 million, up from 7.28 million in 2021.
While this is still short of the 16.73 million in 2019, Alessandro D’Ubaldo, founder of Dubaldo Real Estate and operator of Greystone Villa Dubai, said the short-term rental market has already exceeded pre-pandemic levels.
“We’re now witnessing a level of activity that many thought would not be achievable,” he said.
According to letting agency AirDXB, the list of top 10 source markets for short-term tenants is led by Russia followed by the UK, US, India, Saudi Arabia, France, Germany, Italy, Canada and Egypt.
Director, Gregory Lewis said homeowners saw short-term rates rise by up to 10 percent in the first half of last year.
However, with Dubai’s long-term rental rates last year rising by an average of 36 percent, Lewis said this led to some homeowners switching from short-term letting to long-term tenants to avail of better yields.
He estimated that stock in the short-term sector had dropped by around 28 percent in Dubai in 2023.
“This is good for our homeowners,” Lewis said. “Less supply with increased demand is driving up the average nightly rate, and combined with our high occupancy levels, this means higher returns for our clients.”
Following the successes seen in the UAE, neighbouring Saudi Arabia in January approved a new law to allow citizens to rent out rooms in their homes to tourists, paving the way for the introduction of operators such as Airbnb and rival HomeAway.
“Encouraging Saudi citizens to play a more active role in the nation’s economy, and introducing regulations that protect both property owners and guests, positively impacted the country’s tourism and hospitality sectors,” D’Ubaldo said.
“This can already be seen across the promising short-term rental market in Saudi Arabia.”
AirDXB’s Lewis said Saudi Arabia was “an exciting market” and he has not ruled out expanding the brand to the kingdom.
“There will be an official tourism service provider for short-let property listings, so it remains to be seen if companies like Airbnb will be invited to operate there.”