Owning your home in the UAE can offer stability against rising rents or restless landlords and hopefully capital growth.
For many it now also presents an opportunity to enter Dubai’s rapidly evolving holiday homes market - and to turn that property into a passive income source.
In April 2016 Dubai revised holiday home leasing regulations, opening the market to individuals letting homes short term.
Since then, thousands have joined global platforms such as Airbnb to leverage earnings when they’re not using their place, according to property consultancy Knight Frank.
The advantage for investors is they make much more money short-term than they do long-term, especially in this market – rents are falling dramatically and tourism isn't.
Anna Skigin, Frank Porter
Its February report Dubai Holiday Homes Market Review 2019 identified 10,766 active listings in 2018 – a growth of 161 per cent since 2016 – out of 20,395 Airbnb-registered properties.
The report suggests two per cent of total Dubai households are involved in this market – the highest proportion compared with other key global hub cities. Hotspots include Dubai Downtown and Dubai Marina, but also Mirdif, Jumeriah Village Circle, Sports City, Al Barsha and Al Rigga.
A separate report outlining Airbnb growth from real estate services firm Chestertons MENA found revenues for Dubai properties listed on Airbnb in 2018 increased by 69 per cent compared with 2017, to more than $101 million (Dh371 billion).
Thea Myhrvold’s parents are among Jumeirah Lake Towers homeowners enjoying Airbnb-driven revenue.
They invested in a two-bedroom, two-bathroom holiday apartment “with full sea views”, plus pool and gym access. Rather than leave it empty during their absence they put it to “work”.
“Flexibility is key, especially when it is a holiday home, so you can visit when you want,” says Ms Myhrvold, founder of a tutor search platform, who arranges the let for her parents. “The Airbnb option seemed the best for us - a year-long contract doesn’t allow you, as an owner, to come and stay when you want.”
Like many favouring short-term or nightly lets, Ms Myhrvold uses a specialist property management agent. Her agent, Canada-raised Russian Anna Skigin quit London for Dubai to start Barsha Heights-based agency Frank Porter after identifying a gap in the market and Airbnb-growth potential during a 2017 vacation with her husband.
“There are so many beautiful properties with views, pools and gyms … it seemed like a great opportunity,” she says. “But a lot of friends here didn’t know what we were talking about - they didn’t know how to do it.”
Ms Skigin says overnight rental for a two-bed JLT apartment ranges between Dh550 and Dh850, depending on aspects such as styling, position and views.
“That’s (the same) across Dubai, really,” she says, although the equivalent in “less touristic” locations such as Sports City fetch Dh400-650 a night. Two-bedroom City Walk pads can yield Dh850 nightly.
If you’re on vacation, working away weekdays or have a tenancy void, Airbnb can generate significant extra funds.
“The advantage for investors is they make much more money short-term than they do long-term, especially in this market – rents are falling dramatically and tourism isn’t,” says Ms Skigin.
That said, entering the holiday homes market is not entirely straightforward, so agencies such as Frank Porter are growing, taking regulatory and logistics pressures off owners for 17 per cent of rental income for “full management”.
“The hassle is quite big if you’re managing on your own,” says Ms Skigin. “You have to be licensed, which is time consuming, expensive. We do that - as well as the laundry, cleaning, checking a person in; sometimes they arrive at midnight."
Ms Skigin says reviews are key to anyone considering letting out the property on Airbnb.
“That’s how you are ranked and make money," she adds. "To get good reviews, sometimes you have to go the extra mile, to offer support if something breaks."
Matt Sadler, 35, is another Dubai resident earning passive income from strangers holidaying in his home while he’s on his vacation.
The earnings have partly financed the Briton’s renovation of the three-bedroom Lakes villa he shares with his wife and son.
“We have a beautiful home that can accommodate a family,” says Mr Sadler who, as an Airbnb user, understood the concept – and that his place could generate cash in their absence.
“They can enjoy meals around a kitchen table, the kids can play with toys we have, play in the garden safely.”
The couple have let the villa three times since summer 2017 with the income, in one case, financing their holiday.
“We still had a mortgage to pay and the villa would have been empty anyway. Knowing it would be occupied and looked after while we were away was reassuring,” says Mr Sadler.
He engaged Sama Sama Holiday Homes, run by fellow Brit Catherine Ridley and recommended by a friend who enjoyed a “huge return” holiday letting his studio apartment.
She removes the admin from short-term letting – such as ensuring Department of Tourism and Commerce Marketing (DCTM) and tourism fees are paid – while earning owners money.
A “superhost” on Airbnb, achieved by considerable top mark reviews, Ms Ridley also posts properties on numerous other channels, including Agoda, Booking.com, FlipKey and TripAdvisor.
“We’re very careful who we let stay,” she says. “Wherever we can mitigate risk, it is mitigated. We offer an insurance product for the property, which covers contents. For property owners going away, there’s no reason not to.”
Owners with an investment property can also benefit, says Ms Ridley.
“People waiting for the market to bounce back don’t want long-term tenants, but also don’t want it empty because they’ve got a mortgage to pay," she adds.
“We’ve got people waiting for the right price on their villa – in the meantime, between guest stays, we’ll work with the real estate agent and allow for viewings.”
Frank Porter’s Ms Skigin is confident the portfolio of Dubai holiday homes will continue to expand. Certainly Ms Myhrvold had no concerns joining the Airbnb community and a “sharing economy experience at its best”.
“This property is used primarily as a holiday home, so our private items are in external storage,” she says. “I have put full trust into my management company who screen all guests and make sure I have people I feel comfortable having in our home. They make sure everything is fine in terms of our property but also for the guests.”
The Sadlers also felt little risk. “There’s always some with letting your home out to strangers, and that’s why it is so reassuring the market in Dubai is regulated,” adds Mr Sadler.
So how does all this affect Dubai’s hospitality market?
Ali Manzoor, Knight Frank partner, hospitality and leisure, cites a “discernible impact”.
“In general, hotels outperform the holiday homes market,” he says, “the exception being summer months during which they are either on par, or holiday homes outperform.”