Demand for short-term monthly rental units in the UAE is increasing as more people decide against committing to long-term contracts amid uncertainty driven by the war.
The availability of units previously offered to visitors for short stays has also gone up due to a slowdown in tourism, according to analysts.
Short-term rental and hospitality sectors “experienced a noticeable slowdown” when the regional war broke out, Alec Smith, head of sales and leasing at Savills Middle East, told The National.
“Flight cancellations, travel disruptions and heightened geopolitical uncertainty led to a sharp decline in tourism, with both leisure and business travel reducing almost overnight,” Mr Smith said. “As a result, many short-term operators saw bookings cancelled or postponed.”
However, the market quickly evolved. Rather than being driven by tourists, demand shifted towards Dubai residents and new arrivals who had been considering buying a property or signing an annual tenancy contract.
Property owners and operators repositioned their units to cater to longer monthly stays instead of short-term visits.
“This effectively changed the profile of the short-term rental market. Instead of predominantly serving visitors staying for three to 14 nights, many properties were occupied by residents seeking monthly accommodation with lower commitment and greater flexibility,” Mr Smith said.
First Class Property Management is among companies renting out units on a monthly basis to UAE residents.
Luis Santos, its co-founder and managing director, said more than 90 per cent of its units are currently rented out for monthly payments. The company manages more than 600 homes in Dubai, Abu Dhabi and Ras Al Khaimah.
“We have very few tourists staying with short-term rentals, which is the same thing that you can see with the hotels as well. But our occupancy remains high because we have these monthly stays that are generated by UAE residents,” Mr Santos said.
In the second quarter, the company recorded an average stay of 21 days, while previously it was around 11 days, “because the profile [of guests] staying with us is completely different now”, he added.
Not cheap
Properties let on a monthly basis, in most cases, command a premium compared to traditional annual tenancies.
Monthly rents vary significantly depending on factors such as the location, building quality, age of the property, furnishings, amenities and the length of stay. Rates are highest in prime locations such as Downtown Dubai, Palm Jumeirah and Dubai Marina.
Studio apartments range between Dh4,000 and Dh8,000 per month, with one-bedroom apartments between Dh5,000 and Dh12,000, according to Savills. Two-bedroom apartments can demand between Dh8,000 and Dh20,000 per month.
Valuing flexibility
Arooba Noor, who relocated to Dubai from Riyadh three months ago, is staying in a two-bedroom apartment in Downtown Dubai, paying a monthly rent of Dh16,000.
The businesswoman has continued with the arrangement “mainly because of the flexibility”, she said.
“We want to see: do we want a house in the future, an apartment? Which area do we want to move into? So we're working out what's best for us, and then in this time, this [rental] gives us the flexibility to pay on a monthly basis and not be tied into a contract.”
Flexible rents have become “increasingly attractive for travellers, relocating professionals and residents who prefer to delay long-term commitments while geopolitical uncertainty persists”, Zacky Sajjad, director of business development and client relations at Cavendish Maxwell, said.
“Monthly stays provide a wait-and-see option. They allow residents, business travellers and families to remain flexible without signing a 12-month lease, particularly if travel plans, employment or schooling arrangements may change over the coming weeks or months.”
Dubai has introduced an initiative to help tenants pay rent in monthly instalments as part of moves to ease their financial burden. The Dubai Land Department unveiled the Flexi Rent scheme in June in partnership with 12 property companies including Deyaar, Wasl, Dubai Investment Real Estate and Driven Properties.
