Dubai the most profitable city in the world for Airbnb landlords

Homeowners with properties near Burj Khalifa charge guests an average of $1,150 a night, study finds

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Dubai is the most profitable and expensive location in the world for Airbnb landlords, particularly for owners of properties near Burj Khalifa, a survey by UK-based landlord insurance company CIA Landlords has found.

Landlords who own properties surrounding the world’s tallest building can earn an average of £930 ($1,150) per night, or £339,450 per year, which means it can take only four months for them to break even on their investment, CIA Landlords said.

“Dubai is the most profitable location for landlords as it takes just four months for them to earn their money back after investing in a property,” CIA Landlords said in the survey, which was based on the price of an average one-bedroom, 450-square-foot apartment and divided by the average Airbnb price for one night.

“The average price to buy an apartment in the city is £112,624, meaning just 121 nights need to be sold for this cost to be earned back. However, this is only a profitable location for landlords who have a property near Burj Khalifa, as those further away rent for just £181 per night.”

The property market in the UAE, the second-biggest Arab economy, has made a strong recovery from the pandemic-driven slowdown as the country’s economy improves on the back of fiscal and monetary measures.

Pent-up demand and improved investor sentiment have also helped to drive property sales, particularly in Dubai and Abu Dhabi, amid the pickup in economic activity.

New initiatives, such as visas for expatriate retirees and the expansion of the 10-year golden visa scheme are expected to support the local market, industry experts say.

The second-most profitable location for Airbnb landlords is Hilo, in Hawaii, where it takes only 200 nights to be sold for owners to make their money back, the survey found.

“With the average cost of buying an apartment here also over half that in Dubai at £51,300, this is a safer investment option for those just beginning their Airbnb journey,” it said.

New York ranked second in the world for the most expensive Airbnbs, with owners of properties near Central Park charging an average of £767 per night, the CIA Landlords survey found.

Edinburgh was in third place, with owners of properties near the city's famous Edinburgh Castle charging £416 a night, followed by homes in the Arc de Triomphe area in Paris at £412 and properties overlooking San Francisco's Golden Gate Bridge at £403.

Founded in 2007, Airbnb has grown into a global online marketplace for homestays with more than 6 million active listings worldwide in more than 100,000 cities and towns, the company said on its website.

The total amount earned by Airbnb hosts since 2007 to February this year is more than $150 billion, it said.

Meanwhile, Cuzco, in Peru, is the most unprofitable location for landlords to begin their Airbnb business as it would take more than 13 years, or 4,810 nights, for a landlord to earn their money back, the CIA Landlords survey found.

Beijing in China is the second-most unprofitable city for Airbnb landlords, where it would take 3,771 nights to break even on a one-bedroom property at £172 a night, followed by Nairobi, Kenya, at 3,389 nights at an average cost of £32 a night.

London is the fourth-least profitable location, taking Airbnb landlords more than five-and-a-half years — 2,803 nights — to earn their money back after investing in a property.

“With the average cost of buying a one-bed apartment being £524,088, landlords here would need to charge more to make their money back quicker,” CIA Landlords said.

“While landlords may be sceptical about investing within properties for the purpose of Airbnbs, it is clear that there is a demand for properties in this space and it is a profitable business move.

“It is important, however, that landlords weigh up the pros and cons with investing abroad, especially in countries in other continents where maintaining properties and guests will be harder. If these problems can be overcome, then evidently they will see a healthy return.”

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Updated: May 06, 2022, 7:47 AM