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Leading short-term rental (STR) and holiday home operators in Dubai say that the demand for STR in Dubai has been on an upswing since the start of 2021 and climbed even higher after Expo 2020 started and global travel restrictions were lifted.
Vinayak C. Mahtani, CEO of Bnbme holiday homes, said that short-term rentals started with solid demand this year, with the year seeing growth in excess of 100 percent over 2020, which was already a very strong year. This is despite a slowdown in July and August, he added, due to the summer and the travel restrictions on the major source markets of Saudi, India and the UK.
“Average daily rate (ADR) reduced in summer, but demand remained, maintaining a 60–70 percent healthy occupancy rate,” he said. “All the areas we operate in are doing well, particularly the Palm, Marina, Bluewater and Downtown. We are expecting the year to end with a bang now that Expo 2020 has also started.”
Reem Al Khatib, UAE Managing Director at GuestReady, called Q4 2021 a great quarter for the firm, which enjoyed over 80 percent occupancy. During Q1 2021, it was an even more impressive 90 to 95 percent. She added that “occupancy has increased, and prices have recovered as well. The rates continue to rise; we’re quickly seeing them recover back to pre-COVID rates. The rates this month have been the highest in four years.”
MARKET TRENDS
Al Khatib stated that there are over 10,000 active listings in Dubai on the short-term rental market; Dubai Marina and Downtown have the highest number of properties. “Besides the residents and tourists, this year we saw a new category of travellers: digital nomads, [who] we believe are here to stay.”
He continued: “Dubai [is the] second most popular destination in the world for digital nomads, who prefer to live [at] and work remotely from home. UAE residents switch from annual rental agreements to short-term lets to capitalize on the flexibility. A popular property is a two-bedroom apartment in Dubai Marina with a sea view; this generates a nightly rate of 600 dirhams during the low season and 1200 dirhams during the high season.”
Citing Airbnb demand insights for the UAE, Shine Sunny, co-founder and CEO of Raine & Horne Holiday Homes, said that nights booked by guests are currently 1.91 times the pre-COVID numbers of 2019. “Around 47 percent of stays are for seven nights or longer, 64 percent of bookings were from international guests, 89 percent of bookers looked for an entire home/apartment, among the key trends highlighted.”
According to Sunny, guests are now also spending more on Airbnb than they did pre-COVID. Back then, he said, guests expected less than they did of traditional hotel-style accommodation; if a guest arrived and found a few broken items or a non-updated rental, it was overlooked. Now, however, the expectation is of the level of a 5-star hotel, with spotless interiors. “We are expecting a massive holiday boom for the peak months of December to February,” he added.
Mahtani has seen demand from tourists travelling on vacation, mainly from Eastern Europe, Poland, Ukraine, etc. The other renters are families and business owners who have moved to the UAE and are currently looking to buy or rent a place to stay, he said.
“We operate and service the larger and luxury market segment and have seen the 4-to-5-bedroom properties are currently performing the best, [with] a lot of demand for penthouses with great views or private pools. Our penthouses rent out from 5,000 dirhams to 20,000 dirhams per night.”
“Our most expensive unit rented recently was a penthouse in Downtown, rented to a Champions League footballer who spend well over $100,000 for two weeks,” he added.
POPULAR COMMUNITIES
Mark Kennedy, co-founder and CEO of Kennedy Towers, said Dubai Marina and Downtown Dubai remain the most popular residential communities, with consistent demand coming from corporate travellers and residents searching for more flexible and convenient accommodation. “We have seen that one-bedroom and studio apartments continue to have the highest occupancy rates. [There is] increased demand for four-bedroom villas that residents or corporate travellers lease on a flexible basis,” he said.
Anna Skigin, co-founder of Frank Porter, said people are renting for longer stays and demanding high-speed Wi-Fi and work areas due to the shift towards working from home. “We see a growth in many new places, not just Dubai Marina [and] Palm Jumeirah, but even in Sports City, JVC, Business Bay, and a lot of interest now surrounding the Expo site.”
Kennedy said that the Dubai Expo has driven bulk accommodation requests for extended stays. “We have been working with several country pavilions to secure multiple units in the same buildings for their employees. Larger units have also been in high demand for the Expo period.”
“Expo attendees have been searching for extended stays throughout the event period, with increased demand seen in the more southern communities like Dubai Marina and Jumeirah Lake Towers due to their closer proximity to the Expo site,” Kennedy added. “We have expanded our inventory by 25 percent this year to accommodate the increased demand.”
(Reporting by Hina Navin, editing by Seban Scaria)
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