Dubai has one of the world’s most developed short-term vacation rental markets. The emirate attracts millions of tourists annually, and launching an Airbnb here is a popular business idea. However, before entering the market, it is necessary to discover its advantages and drawbacks, perform thorough market research, and learn about the experience of entrepreneurs who already operate in Dubai.
Benefits of Launching an Airbnb in Dubai
Dubai’s short-term vacation rental market is exceptionally stable, which is a massive benefit for new entrepreneurs. Numerous Airbnbs already successfully operate in the city, growing yearly. At the same time, the demand is also increasing steadily, guaranteeing a stable flow of guests and enabling rentals to be profitable.
Dubai has an unprecedentedly huge rental market, which also means an unprecedentedly developed infrastructure. The investors can choose from a wide range of additional services and even pass on the management of the property to a professional company like https://masterhost.ca/airbnb-management-dubai/.
The scale of the industry in Dubai is recognized and encouraged by local authorities. Airbnbs have become a popular alternative to hotels among visitors to the Emirates, so the government has made it as convenient as possible to launch and manage short-term rentals. The legislation is straightforward to follow, and there are no difficulties with paying income taxes.
Even though the benefits of launching an Airbnb in Dubai are excellent, it does not mean the business is easy. The investors should perform thorough research before entering the market, and this section will feature a list of business aspects that should be kept in mind, as well as a market overview of the short-term rental industry in the Emirates.
Competition, Legislation, and Real Estate Prices
First, it is reasonable to address the elephant in the room: the vacation rental industry in Dubai is highly competitive. It is one of the most inflated markets in the world, as it is hard to find another city that has more than 20,000 Airbnb listings in it. This implies an extraordinarily intense competition, as there will always be many rivaling rentals nearby in any part of the emirate.
The growth of the vacation rental market has also inevitably led to inflation of real estate prices. The cost of launching an Airbnb in Dubai is high, especially in the most demanded areas of the city. The silver lining here is that the rates are correspondingly high, meaning the revenues make the investment worth it for most entrepreneurs.
As it was mentioned, hospitality-related laws are rather straightforward in Dubai. This, however, does not mean the legislation should not be treated seriously. Entrepreneurs still have to learn local laws and make sure to follow them throughout the entire period of their business operation.
At the time of writing, there are around 26,800 active listings in Dubai. Even though the emirate’s territory is rather large, the density of rentals is still very high in all areas of Dubai. The situation with Average Daily Rates is not as straightforward, as they may vary dramatically depending on the district of operation. The emirate-wide ADR in Dubai is $793, making it one of the most expensive places to rent an Airbnb.
Despite such a high price level and intense competition, the occupancy rates in Dubai averaged 57% throughout the year. This enables local properties to generate $166,100 worth of average annual revenue, which is a result that makes Dubai one of the best places in the world to launch a short-term vacation rental in.
Entire home listings are expected to dominate the market, as private and shared rooms only comprise 13% of all rentals in the emirate. The most popular cancellation policy in Dubai is Strict, and 49.3% of listings come with this option. This gives new entrants room for a competitive advantage, as visitors will be much more likely to book a property with Flexible or Moderate policies.
Another massive benefit of starting an Airbnb business in Dubai is the sheer number of entrepreneurs who have already succeeded in this market. Many of them are willing to share tips and recommendations for aspiring businessmen, and those considering investing in Airbnb in the emirate should keep these recommendations in mind.
The main tip most successful hosts keep repeating is choosing a proper location. As mentioned, different parts of the city have various real estate prices and demand levels among visitors. These and other operational factors should be considered and thoroughly researched to make an informed decision.
The second recommendation to aspiring entrepreneurs relates to using professional management services to ensure the first reviews are positive. The feedback of the first guests can either jumpstart a thriving business or ruin the potential of the listing, so it is always better to delegate significant tasks to professionals in the beginning. The assistance of management companies will help businessmen avoid making beginner’s mistakes and enable Airbnb to deliver a top-quality service from day one.
Last but not least, the investors should always be in the loop. It is essential to keep track of market trends and follow them to avoid being left behind by competitors. This relates to almost every aspect of the business, starting with pricing strategies and ending with legal updates. Of course, some of these tasks can also be delegated to professionals, but it is always safer for investors to understand their business in-depth. The extreme levels of competition in Dubai do not make it the best place in the world for turning a rental into a passive source of income.