There are a number of reasons investors might consider real estate investments in Dubai. With individuals not being subject to taxes on their income from real estate, a steady stream of visitors (particularly during the winter season) and the global short-term rental market expected to grow, Dubai could offer plenty of opportunities for high-yield returns in the short-term rental market.
Through my company’s operations in Dubai, I’ve seen that as a luxury location, there’s a range of markets to satisfy. If you don’t have the capital to tap into the high-end visitor market, there are plenty of alternatives to attract visitors who want a taste of the high life on a more sensible budget.
Dubai is also a popular place to do business. Whether you’re providing short-term business or conference venues, commercial opportunities or accommodations, its tax-free income legislation can make the city an attractive option.
Options For Breaking Into The Market
Here are 10 ways to break into the market for those considering expanding into short-term rentals in Dubai.
1. Look outside ‘prime’ locations. If you have the funds and the opportunity to break into the prime locations—such as Downtown Dubai, Dubai Marina, Jumeirah Beach and Global Village or its manufactured islands of Palm Jumeirah—then you’re likely to see a steady flow of guests. However, if you want to explore a market with a lower investment, I’ve found that there’s still demand outside those locations, such as Al Barsha South, Jumeirah Village Circle and Dubai South. With lower prices and more space to enjoy—catering for apartment and villa properties—these areas can still be ideal for travelers who are working during their visit or bringing their families.
2. Explore out-of-town opportunities. Further afield of the prime locations, nearby towns and communities could also provide opportunities if your guest resource pool doesn’t need permanent access to all the usual tourist stop-offs and attractions.
3. Decide whether you’ll work with a property manager. If you prefer a hands-off investment, you can consider employing the services of a property manager or agency to help you keep your rental occupied, maintained and advertised. Also, keep in mind that homeowners can only register up to eight holiday home units. In my experience, for more, you’ll need to be a professional operator with a trade license. If you lack this type of license, you can consider employing an agency already holding one.
4. Consider hotel apartments. Another option within Dubai’s tourism industry that some investors might opt for is managed hotel apartments. With the hotel operators providing the apartment management and practical end of the arrangement, such units can offer both rental incomes and capital appreciation for hands-off investors.
5. Convert residential properties. As with any other developer or investor, why reinvent the wheel? Converting residential properties into rental villas and apartments might allow them to appreciate from their new usage.
6. Pay attention to potential off-plan property investments. The savvy investor monitors all the activity in their market, and with a good deal of development opportunities in the Dubai area, buying property before completion might result in discounts and savings.
7. Consider real estate investment trusts. Not every investor wants to be tied into real estate deals. One potential solution for those groups is a real estate investment trust. With these, investors may be able to take advantage of high-rental yields without owning properties.
8. Explore collaborations and joint ventures. As with elsewhere around the globe, lower-capital investors can also consider joint ventures and crowdfunding to break into the Dubai market. Combining resources can give you access to higher-yield opportunities on a lower individual budget.
9. Identify high-demand properties, and optimize pricing strategies. Again, these are standard practices for all short-term rental investors, but it doesn’t do any harm to reinforce such strategies here. Locating your best options is half the battle; the other half is making the most of them. That includes procedures that ensure a strong and steady return with premium rates during peak seasons and year-round occupancy, topped off with good value and exceptional service for your guests. Maintaining the property’s presentation, marketing and customer service are all part of an efficient business model and should be priorities in your practice.
10. Target alternative guest opportunities. Dubai is, without a doubt, a luxury tourism destination. However, breaking into alternative markets, like the business sector, to fill your apartments and villas could help you meet your quota outside the typical tourist season.
Making The Move Into A Dubai Investment
Dubai’s Department of Tourism and Commercial Marketing has created a framework that makes investing in short-term rentals straightforward and well-structured while assuring a high standard of property for its guests.
If you’re going to invest, take the time to understand the laws and legislation in Dubai, as well as the type of visitor your property will appeal to. With plenty of lucrative opportunities for owners and investors, it’s essential to monitor market trends and adopt dynamic price strategies to take full advantage.
To find the right property for your investment, you’ll need to consider the locations, markets and available services that fit your budget. On top of that, you’ll need to monitor Dubai’s evolving rental regulations.
Once legal matters are taken care of, remember that your property needs to be continually well-maintained and presented, and your rates need to be competitive for your tenant demographic. Ensure you also market the property on multiple channels, and offer fast and efficient service for your guests. Leveraging current technologies can offer your guests simple ways to sign digital contracts, pay rent, make requests and communicate.
If you thought such a glamorous and luxury market was out of reach, think again. By exploring your options and keeping a few best practices in mind, you just might find the opportunity you’ve been looking for.