The Q4 of 2021, especially December, proved a striking phase for the city’s holiday homes. Now, property owners can prepare for a full-year optimum occupancy—more than 10,000 vacation rental listings in Dubai, ensuring a breakout year.
Everyone should make a wise decision to diversify their portfolio with real estate investments. The ROI for real estate differs greatly based on what you decide to do with your asset.
In the buy-to-let category, vacation rental listings in Dubai provide the highest potential for profits, but they have their hurdles. Even in a carefree industry, rewards are not guaranteed, and there are some crucial factors to consider.
Short Term Rental
After a sharp decrease in reservations in 2020 due to the global pandemic and travel restrictions, the demand for short-term rentals spiked in 2021. This trend is expected to continue in the following year.
According to a study conducted by Airbnb, more and more travelers are getting warmed up too long trips and choosing a temporary base for lifestyle perks since they enjoy the flexibility to work from anywhere.
Different studies reveal that the UAE is among the world’s most liked destinations to reside and work. However, even permanent locals are turning away from yearly rental contracts that have the difficulty of post-dated cheques and upfront commissions.
Currently, Dubai boasts more than 10,000 active vacation rental listings. The occupancy rates surged 32% from December 2020 to December 2021, and ADR increased by 15% to 28%.
The introductory monthly occupancy rate grew to 94%. In addition, ‘Move now pay later’ strategies and Flexi payment terms make it more straightforward for independent investors to infiltrate the short-term rental field.
Although property costs have increased in the past 12 to 18 months, there is still sufficient room for growth. Along with high-income potential as opposed to having long-term tenants, other perks include the flexibility to sell when the time is appropriate and adjusting your prices to meet demands.
Based on what demographic you are aiming at, consider factors like salary trends and jobs, whether the community is predicted to grow, and fame among tourists. Then, ask yourself: Why would anyone choose this specific region? What is its proximity to the primary attractions? How accessible is it?
Each area has its perks, and it also boils down to the amount of money you are willing to splurge. So, for example, even though Palm Jumeirah, Downtown Dubai, and Dubai Marina are gold mines, they demand more capital than the secondary sphere of real estate in the South, which offers its perks, like payment plans, price points, and the Expo 2020.
Management and Maintenance
Operating a successful short-term rental demands effort. If you wish to manage it yourself but reside far from the property, dealing with any future issues will be challenging. It is more affordable to cope with things yourself, such as repairs and guest liaisons.
But this is only possible if you live nearby. As an alternative, you can consider hiring a professional property management brand to handle everything.
Before signing the contract, think about the method of listing the vacation rental property and keep it full continuously. Will it mean advertising on social media, using a powerful booking platform, hiring a property management company to handle marketing, or making your website?
Some Common Mistakes
Picking out the wrong property
Long-term profit is related to a range of details – the address, type of property, property features, and furnishing quality. All elements play their part in determining the revenue and pricing strategy. Therefore, it is essential to do a deep market analysis before investing and projecting potential expenses.
Managing your business
As profitable as a short-term rental appears the success is based on offering a high level of service to your guests. This is complicated if you reside in another country or lack time to give.
Curating a flawless experience for all guests involves many changes, is demanding, requires maintenance, and smooth communication. So instead of viewing the property as a source of passive income, you have to decide how to manage the investment efficiently.
Another point to consider is that the UAE holiday attracts fewer conventional tourist bookings in the summer. But the remote working model has developed the latest guest pool. As a result, corporate travelers are shifting for months at a time.
Imagine how your guest profile will change with each season. Then, add a B2B marketing technique to make the most of your investment in the year.
4 Tips For Productive Short Term Rental Management
Be a Budget Boss
In this industry, you have to pay for cleaning and utility expenses, maintenance costs, and the commission that the listing platform will charge. Given all these expenses, budget is a crucial component.
Imagine that you have to describe all expenses to a business partner. While you want to guarantee a high-quality experience, it should be balanced out with your income to gain a positive cash flow.
Charge Competitive Costs
A hurdle in short-term rental management is setting the correct rental cost. Many factors determine the rental price – square feet, amenities, address, etc.
You will have to go through trial and error to know what you should be charging. It also depends on the season. To set your price, you will have to conduct detailed market research. See what other properties in the same region are charging on platforms.
Be Energy Efficient
As a landlord, you’ll pay the utility bills, even when there are no tenants. So investing in energy-efficient solutions will minimize the utility bills and boost your cash flow.
This could mean installing bright lights to regulate energy usage and temperature.
Great Service, Excellent Feedback, High Occupancy
The first rule of a successful vacation rental is that they solely depend on their reviews. Negative reviews will reduce your vacancy rates, and the amount that you charge also diminishes.
Essential touches, such as local events, best restaurants, and suggestions for local things to do, will guide your guests. Even a tiny welcome gift is what many hosts do.