We are pleased to launch the second edition of the AirDXB Short-Let Market Review Report, focusing on the developments in the Dubai short-let market for Q2 2023.
The strength of the Dubai real estate sector is evident with H1 2023 recording the highest levels of real estate sales to-date: 61,000 total sales with a total value of nearly AED180 billion. Industry experts believe sales may exceed AED300 billion for the first time by the end of this year. What’s making Dubai so interesting to investors? A rising population, new developments, minimal taxes, and a strong short-let market compared to global counterparts.
In this report, we take a look at the key trends impacting the short-let market in Q2, such as the significant shift in apartment v villa sales, as well as market performance indicators, including volume of stock, average returns, and occupancy rates.
The rise of the property investor
Q2 saw a significant surge in property transactions, with May alone seeing a 76% increase YoY. However, villa sales declined by 31.7% across the quarter YoY. What does this mean? Apartments are where the interest lies, either to live in personally or as an investment vehicle. AirDXB has seen heightened levels of interest in the short-let market, particularly with first-time buyers looking to supplement their income, secure an asset and meet mortgage repayments without tenancy and contractual obligations.
Normalization of Long-Term Rentals
We are starting to see long-term rental contracts decrease in value, for example the average rental contract in Dubai Marina is now AED5,000 less than it was in Q1. This is an indicator of things to come. Residents in Dubai are tiring of paying exorbitant prices and the perceived lack of real value. This ties in with the increase we have seen in the purchase of apartments – many residents would prefer to pay their own mortgage than the recent inflated rental prices. We believe this will be the start of the market normalizing in terms of long-term rentals, increasing the value found in short-let.
Dubai’s Booming Tourism Sector
Part of the success of Dubai’s short-let market lies in the consistent stream of tourists. Ramadan, normally a slow period, saw a record number of visitors, with 1.35 million people coming to Dubai during the holy month, a 19% increase from 2022, and 50% increase from pre-pandemic figures. Dubai has claimed the title of the world’s most popular tourist destination for the second year running while Dubai International Airport remains the busiest international airport for 9 years running. Dubai is buzzing with activity – good news for short-let!
High Occupancy Rates are Key to Success in Dubai’s Hotter Months
The short-let market is cyclical meaning that colder months will out-perform hotter months, even if Q2 2023 saw a greater number of tourists than previous years. As expected, average daily rates across the market were lower in Q2 than in Q1 (by 31%). Occupancy rates also saw a drop across Dubai, however these were 3% better for the quarter YoY. AirDXB were pleased to report that our average daily rates remained consistent for the quarter YoY and our clients enjoyed consistently higher occupancy rates than market average – in fact we had a staggering up to 55% higher occupancy rate across the quarter meaning strong returns for our clients in the low season.
Higher Sale Prices for Chain-Free
The short-let market remains a strong property investment for those considering selling the property in the short-mid term. There can be up to a 15% increase in sale price for buyers looking for chain-free property acquisitions. Last year alone, our boutique investments advisory arm advised on 77 property transactionsamounting to over AED100 million of assets. We are a fully independent, unbiased advisor for our clients wishing to sell properties, as well as those who need advice on where best to purchase for maximum returns on the short-let market.