The Dubai Real Estate Market Review Report: Q1 2024

Welcome to The AirDXB Group Dubai Real Estate Market Review Q1 2024 Report. This report provides insights on trends and statistics impacting the Dubai real estate sector, covering the three key sub-sectors: transactions, short-let investments and long-term rentals.

Key developments in Q1 2024 impacting the Dubai real estate sector

Verified property listings
The government are making key updates to real estate regulations in order to safeguard the industry and to enhance transparency in the market for sellers, buyers, landlords and tenants alike. One such step is the introduction of QR codes to verify property listings. All real estate agencies are required to register their properties with the Dubai Land Department and obtain a unique reference number for each property. This gives buyers and tenants greater confidence in their investment decisions and should ensure faster sale and contract agreements for sellers and landlords.

Eviction notices now attached to the property
Another key development this quarter is the new rule regarding eviction notices. These are now attached to the property rather than the landlord, meaning that once served an eviction notice, even if an existing landlord sells the property, the terms of the notice still stand, including timeline for the tenant to vacate. This means the new owner gets full control of their property faster and will make the sale process much more efficient.

RERA rental calculator adjustment
In the long-term rental market, the Real Estate Regulatory Authority (RERA) issued a new rule allowing landlords to adjust rental prices at the time of tenancy renewal in order to align with current market value, ie rental increases are no longer capped at 5%. With landlords able to increase rents by up to 20%, we may see a drop in tenancy renewals in areas that are affected by the price surge with people choosing to move further afield for better value. This may in-turn stabilise the rental situation and mitigate price increases in already expensive areas. We expect this regulatory change will also result in a spike in the transactional market as property ownership becomes an even more attractive investment opportunity.

Dubai’s population surge: increasing supply of buyers
The market is showing no signs of slowing down. Dubai’s population saw a surge of 25,700 in Q1 2024, expanding to a total of 3.7 million people. From a short-term perspective, this is good news for the rental market, however it also remains positive for the transactional market, as there will be more buyers pushing demand long-term. The UAE Central Bank has stated they predict inflation to rise to 2.5% in 2024, which is still below the global average. These macroeconomic factors, combined with various others, are bolstering the Dubai real estate market and making it lucrative for the foreseeable future.

Short-let market continues to prosper
The short-let market continues to prosper. As property investors are becoming more knowledgeable in alternative ways to earn returns, we are seeing an increase of stock in the Dubai market, plus an increase in market revenue. The Dubai short-let market is unique to other markets, as professionally managed properties stand-out for their hotel standards and high quality of furnishings and amenities, as well as guest care and experience. Similar to RERA, Airbnb are introducing safeguarding protocols to ensure listings are verified and therefore genuine, as well as other steps to reduce cancellations and improve guest experiences. As a SuperHost, we welcome these changes which can only help better serve the community.

Access the report in full >
The AirDXB Group – The Dubai Market Review Report Q1 2024 – FINAL

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The Short-Let Market Review Report: Q3 2023

The AirDXB Short-Let Market Review Report: Q3 2023

We are pleased to launch the third edition of the AirDXB Short-Let Market Review Report, focusing on the developments in the Dubai short-let market for Q3 2023.

Q3 is the epicentre of the short-let market’s low season, as tourism numbers decline in the hotter summer months. However, AirDXB were proud to maintain our high occupancy rates across the quarter, averaging at 95%: a staggering 42% higher than market average. The quarter performed well in general, in fact it was the best performing Q3 on record, both in terms of transaction volume and sales value. The Dubai real estate sector is booming and with progressive government initiatives, such as the UAE Tourism Strategy 2031, it is a great time to consider short-let as one of your key investments.

In this report, we take a look at the continued boom in real estate transactions, the areas in Dubai seeing the most transaction activity, how long-term rents are levelling off in prime locations, the decrease of stock in the short-let market by approx. 20%, combined with record-breaking rates for high season: the perfect example of demand outperforming supply and driving up financial returns.

The Top 5 Trends in Short-Let in Q3 2023

The best performing Q3 in terms of both volume and value of real estate transactions since 2014. The confidence in the Dubai real estate market is at an all-time high which can be attributed to economic stability, government initiatives geared towards facilitating investment, robust infrastructure, high quality of life, and the UAE remaining a tax-friendly jurisdiction. Market accessibility is also a factor. We are seeing an increasingly diverse demographic of property investor. 26% of total sales in Q3 2023 where in the price range of AED1m – 2m which aligns with the on-going trend of apartment sales outperforming villa sales. Many of these transactions involved first-time/one-time property investors, as residents and overseas buyers become increasingly aware of the investment opportunities in the UAE, including the lucrative short-let market, which is seen as a stable and low-risk market in comparison to other global financial hubs.

The shift towards Al Khail Road: a new dominating market. Traditionally popular areas such as Downtown Dubai and Palm Jumeirah no longer dominate real estate transactions, as the high-end investor market settles and the mid-level investor market spurs activity. We are seeing buyers seek value and deals, which can be found in lower-cost areas such as JVC, Business Bay and JLT. In Q3, we saw the emergence of new and upcoming areas such as Al Merkadh (off-plan) and Arjan on the leaderboard which further demonstrates the appetite for value for money. This is great for those looking to short-let their property in these areas, as the lower sale price could provide a greater yield on financial returns.

The impact of the UAE Tourism Strategy 2031 on the short-let market. Launched in November 2022, the proposed strategy will strengthen the position of the UAE as one of the best destinations in the world for tourism, boosting overnight visitors to 40 million by 2031 and attracting AED100 billion in additional tourism-related investments, potentially including commercial gaming (the establishment of The General Commercial Gaming Regulatory Authority (GCGRA) was announced in Q3) which would bring an entirely new type of tourist to the Emirates. Given the long-term and short-let markets target completely different audiences (residents v tourists), we forsee the percentage difference in comparable financial returns will increase by up to 80% in favour of short-let.

Record-breaking rates on short-let. Q3 is the low season for short-let meaning that ADRs often (and did this year) fall below the annual average. However, Q3 is also the time when we get an indication of how high season (starting in Q4) will perform as guests start to book for future months. As of printing, 10% of AirDXB’s portfolio are achieving their highest rates since listing with us, and this percentage is increasing on a daily basis. December 2023 is looking particularly strong as COP28 bookings have secured maximum occupancy rates and ADRs, and the festive season (peak time for short-let) is performing as strong as it ever.

Long-term rental market cooling. Similar to the transactional market, long-term rents are levelling off in traditionally popular areas as renters, just like buyers, begin to move further out to secure better deals. The Dubai Land Department states that the average rent in Q3 was AED68,000 but of course, there are areas where this is significantly higher (eg Palm Jumeirah average rent is AED256,785). A report by CBRE issued in August 2023 stated that areas such as Mudon (5%), Deira (4.8%) and Remraan (4.6%) are seeing the highest percentage increase in rent on a MoM basis (figures from July 2023), showing that the high spikes in rental returns for landlords, in central locations, have cooled.

Access the full report for further information and contact AirDXB Group Director, Gregory Lewis, with any enquiries.

The AirDXB Short-Let Market Review Report: Q3 2023

AirDXB in Gulf News: Dubai short-stay rents sizzle in Q4-2023

First published in Gulf News, October 2023

Dubai: Short-let or long-term rental?

Landlords in Dubai are again having to take up this question in earnest as demand and rental rates on short-let show no signs of cooling off. In fact, there’s every chance that the period up to January 2024, and beyond, could turn out to be even better for the Dubai short-let market. Some landlords have transitioned to the long-term market with the assumption that they will make higher financial returns there. This article takes a look at why short-let remains a strong investment opportunity.

Check out the insights from our Founder and Director, Gregory Lewis, which were used in this article, below.

How many new short stay homes have been added to the Dubai and UAE rental space in the year to date? (Do holiday homes also come under the short-stay rentals?)

Holiday homes are the same as short-stay rentals, you can book an AirDXB property from one night up to 364 nights. While AirDXB stock continues to increase, from our analysis of our competitors and the overall Dubai short-let market, it is clear that stock has dropped. Due to the recent spike in rental returns which can be made in the long-term market, homeowners have transitioned across, or sold their property, to take advantage of these increased rates or sale prices. However, this is positive news for short-let. Less supply (stock) with increasing demand (we are projecting one of the highest performing high seasons in recent years) = higher returns for our homeowners. We are already seeing record-breaking rates for early December – COP28 – and the New Year period. COP28 is a particular boast in 2023, promising over 80,000 international travellers to Dubai in the first two weeks of December.

Are you starting to see a situation where rental increases have stabilised? Or in other words, have short stay tariffs started seeing less growth year on year?

Long-term rental increases are levelling out and stabilizing. While there have been minor increases in areas such as Dubai Marina, areas such as Palm Jumierah and Downtown Dubai have stalled and recorded no increases in recent months. However, we are seeing increases in long-term rents in further out locations such as JVC, but these areas still remain affordable. The top tier market who were prepared to pay higher rents has topped out, and it is now the mid-tier – looking for value and deals – who are dominating the market. This has little impact on short-let, as our returns are based on occupancy levels, average daily rates and ultimately tourists rather than residents. In fact, the impact is positive, as homeowners who have transitioned to long-term have increased demand in short-let.

Short-let returns have been consistently high, and remain higher than that of the long-term market. When long-term rents first started to spike, we saw the percentage difference in returns drop to 30% from 50% (in favour of short-let). However, with the drop in stock on short-let and government initiatives dedicated to increasing tourism (see: The UAE Tourism Strategy 2031 designed to boost the tourism sector’s GDP contribution to AED450 billion, at an annual increase of AED 7 billion by 2031) and global events such as COP28, we forecast that not only will we see 50% higher returns than long-term again in the very near future, but we will actually surpass this.

Any early indicators on the number of short stay homes in Sharjah and Abu Dhabi?

According to Airdna, a data analysis company for the global vacation rental market, Abu Dhabi currently has 1,218 short-let listings, a 96% increase in the last year, with an average market occupancy rate of 41%. Sharjah as 655 short-let listings, up 39% in the last year, with an average market occupancy rate of 37%.

Any trend where you have been seeing landlords/investors pull out of short stay lets and going for full-year contracts?

We were seeing this trend at the start of the year, as some homeowners panicked and made the jump to long-term. Short-let allows homeowners to effectively ‘tread water’ while the market fluctuates and then ultimately settles, upon which time you can todqay make an informed decision on which market you want to be in. Long-term, however, you are contractually obligated to stay in, no matter what happens in the market (unless you meet specific criteria). Homeowners need to consider where they want to be in a years’ time. For example, we spoke to a homeowner who moved to long-term in January 2023 as the rent for their one bed apartment in Dubai Marina had jumped to AED90,000 from AED75,000. The rent for this same apartment is now AED110,000, but given the 5% RERA Index, this homeowner will only be able to increase rent to AED94,500 after 12 months – already 16% under market value on the long-term market. Our conservative projection for this apartment, based on similar properties we have on our portfolio, is that it would make AED130,000 this year on the short-let market, which is 38% higher.

Any other trends? Highest rental for a short stay let in the year to date?

16 of our properties (since increased from time of writing) have recently hit their highest rates yet since joining us at AirDXB, outside of the New Year Period. We have seen a villa in Jumeriah Village Circle attain 300% higher rates YoY – which is equal to what villas on the Palm were making on short-let in 2022. We have a one bedroom in Downtown Dubai making 200% higher rates YoY – which are equal to the rates usually achieved by a 3 bed+ apartment, and a 2 bed apartment on the Palm making 50% higher rates YoY. All strong indicators that the short-let market is thriving.

For further information on the financial returns achievable for your property on the short-let market, contact Gregory Lewis, AirDXB Founder & Director. 

Hassle-Free Hosting with AirDXB Podcast: Episode 1

Hassle-Free Hosting with AirDXB
Introducing: The AirDXB Podcast

We are delighted to announce our brand new podcast, ‘Hassle-Free Hosting with AirDXB’. We catch up with AirDXB clients, industry professionals and real estate experts to discuss the Dubai short-let market, where best to invest for short-let, short-let returns vs long-term rental rates, and everything else Dubai real estate.

Catch our first episode with our client, Tommy Johnson, who speaks about his journey to short-let, his experiences with AirDXB as his preferred host management company, and why he’s not moving to the long-term rental market any time soon: Spotify | YouTube | Apple |  Google| Goodpods| rephonic | IVOOX

 

Available on Spotify, Apple, Google, Goodpods, and all normal podcast channels now.
Prefer to watch the video? Catch it here on our YouTube channel: Hassle-Free Hosting with AirDXB

Wrapping: what is it and do you want it?

Wrapping services in Dubai

Wrapping – the best way to renovate without spending a fortune (in our opinion). Not only does wrapping enhance the look and feel of a room (normally your kitchen or bathroom) but it also serves as protection from heat, moisture, dirt, and other environmental factors – particularly when you have a high volume of guests.

Let us talk you through it.

The benefits of wrapping

There are 3 key benefits of wrapping: 1) look and feel; 2) wear-and-tear; and 3) hygiene.

Look and feel: there are so many options with wrapping, any colour and any style. Transform the aesthetic entirely or simply refresh the room. From country-style kitchen to sleek bathrooms, you can be sure there is something to suit your taste. Extra benefit: it doesn’t have to be permanent. Refresh the style every few years to stay up-to-date with trends.

Wear-and-tear: this is important for short-let properties with high traffic. Wrapping will protect your countertops, cupboards and other fittings. Vulnerable surfaces can be protected from scratches and damage caused over time and which would otherwise occur due to everyday activities like cooking or cleaning.

Hygiene: materials used in wrapping are easily cleaned and wiped down and can create a more hygienic space for food preparation, for example. It acts as an effective barrier against allergens such as pollen, dirt and dust – ideal for guests that can be sensitive to irritation.

And how could we forget… cost!!! Putting a new kitchen or bathroom in, even from IKEA, will be expensive. Wrapping is a great alternative, even from a purely savings point of view.

Types of wrapping

When you are in discussions, it’s good to know what you are asking for:

Vinyl wraps are made out of durable polyvinyl chloride (PVC) material which is water-resistant and very easy to clean but they aren’t always the best choice since they can become brittle over time. However, if you think you will update every few years, it’s a great choice. You can get the most out of it by regularly cleaning with mild detergent so it lasts longer.

Paper wraps are usually made from wood fiber paper which means they’re more durable than vinyl wraps (great for stairs or other high traffic areas for example). Additionally, paper wrap is available in various colors so you can customize the look depending on what hue best fits your existing décor scheme.

Know who to ask

Our interiors consultants can talk you through the different options available. We can guide you through the best colours and materials to suit your home. Contact Leanne for more information.

A happy client

“I moved in to a lovely villa – amazing for me, my husband and our child (and three cats & dog). The space was big, but it didn’t look how I wanted, it was outdated. I had heard of AirDXB but didn’t realise how many services they actually offer, including wrapping. I spoke to Leanne about my wish list and upgraded not only my kitchen, but my bathrooms, window frames, and even the full stairway. The most impressive part was the backsplash in the kitchen – it looks like real tiles! I loved how they could think outside the box and how they guided me along the entire process, from choosing materials to deciding what was ‘must have’ and what wasn’t. A truly impressive service and really affordable too. The best part for me is that it is easily removed; we rent our villa so this was a main consideration – I didn’t want to do anything which couldn’t be reversed later.” (Allison Lear).