How To Start A Profitable Holiday Homes Business In Dubai

Holiday Homes in Dubai Burj Khalifa

Holiday Homes In Dubai

Dubai is a great place for an Airbnb style holiday homes business. In the last 50 years, Dubai has turned from a desert into a city of dreams that everyone wants to visit. 

In the last 5 years, Dubai is the 4th most visited city in the world and the number 1 city for spending by tourists. 

An eye-watering amount of visitors come to Dubai every year and they all need somewhere to stay. 

As such the holiday homes and short term rental business in Dubai have become very popular. I personally started my Dubai real estate business in late 2019 before having to put the breaks on as COVID ripped through the world and caused major lockdowns. However as we came out of COVID in late 2020, and early 2021 it was full steam ahead and I now have a large portfolio of holiday homes in Dubai, this is what I have learned along the way which can help you start hosting all the wonderful guests that visit Dubai every year.

Getting Setup In Holiday Homes and Short Term Rental Business

You will need a registered company if you want real estate agencies and landlords to trust you. 

However, it is not that easy to start a real estate company in Dubai, there are a lot of checks you have to go through and it can be a costly exercise so make sure you have a scaling mindset if you want to operate here as you will need to acquire multiple units to ensure you can cover the government renewal fees for your company every year. 

Make sure you also allow more time than you expect to get everything done, Dubai is a wonderful city but they know how to take their time. Very frustrating when you just want to get going. 

Know The Areas In Dubai

There are hot spots in Dubai that do incredibly well for holiday homes and short term rentals. My top picks would be Dubai Marina, The Palm and Downtown Dubai. The downside with hot areas is they are in demand so expect to pay market rent and you will have to be quick to get in and make decisions… they go fast. 

Other areas to consider that also work as long as the acquisition costs are right are Jumeirah Lake Towers, Jumeirah Village Circle and Jumeirah Beach Residence. 

holiday homes

Property Conditions In Dubai

Like any location in the world that operates a short term rental or holiday home business, the viability of your success will come down to demand and impressing the guest, creating a great experience. It is easy to pick up a “good deal” in some of the older towers in Dubai however the landlords out here don’t like to spend money on their properties and some towers will have kitchens and bathrooms which are 10 – 15 years old. 

These will cause guest issues and a lot of hassle for you so I would encourage you to go for the newer towers with modernised fit-outs. 

DTCM Licences 

The Dubai tourism board run a tight ship to ensure hosts and guests are supported and the regulation is great for professional operators. It gives you credibility that you can be trusted and it protects everyone. 

You will need to register each property for a DTCM licence which costs around 350 AED and then for every guest that stays you must pay a tourism tax. 

For the majority of holiday homes, this will be 10 AED per day for the first 30 days, nothing is due if the stay is longer than 30 days however each stay triggers a new tourism fee. 

Something to factor into your costs for sure when analysing the viability of your short term rental business in Dubai. 

Cash flow 

Setting a property up in Dubai can be quite expensive, however, don’t let that put you off as the nightly rates and occupancy levels are great across a 12 month period. 

Just make sure you know what is coming and plan for it. 

If you are looking to acquire using the rental arbitrage strategy then most landlords want their rent in one cheque for the year, this mentality dates back to when I first lived in Dubai in 2010. I remember landing back then and struggling to find a place that would accept multiple payments, something I didn’t factor in for sure which became a big problem. 

As time has gone by landlords have relaxed slightly and you can now get 4 or 6 cheque instalments, meaning you are paying rent every 2 or 3 months in batches. 

The furniture fits outs for holiday homes will cost you around 30,000 AED for a 1-2 bed apartment to ensure you can be competitive and provide a great looking property that can compete. 

Before you get started you are going to have to get your utility supplies connected, most will hold a 2000 AED deposit for the period you are on the property so expect to have 2000 – 3000 AED tied up until the day you leave the property. 

Holiday Homes in Palm Jumeira

Seasons In Dubai

Like any other location, Dubai has low seasons and high seasons, the good news is the high seasons last for much longer than the low seasons, typically September to May is a very busy time. November to February is extremely busy and you can expect to be 95% plus occupied if you have the right properties. 

However, the low seasons can be painful… it’s 45c – 50c in July and August so not many people want to endure the heat and humidity. 

You can expect low occupancy levels during this time unless you win over some longer-term professional bookings which is the holy grail of any short term rental business. 

That being said, across a 12 month period which is how you should be analysing your profitability in a short term rental and holiday homes business you can expect to come out on top. 

THE END 

-Ryan K Luke 

Founder of Luke Capital Group

Creator of Luke Stays Franchise

Founder of Room 22 Property Club 

Author of How To… Property

Head Coach in the Franchise Vault

PS If you want to get your Dubai business started in the right way invest in a Luke Stays Franchise, a ready-made platform with all the support you will ever need. Watch the webinar now.