Empty luxury apartments in Dubai are finding a new lease on life with Maison Privee, which manages short-term home rentals that provide returns exceeding traditional leasing, helping homeowners weather a softer real estate market.
The Dubai-based start-up is tapping in to demand from holidaymakers and business travellers looking for homes away from home in the emirate, and selling the quintessential Dubai dream: think Palm Jumeirah villa with hot tub and sea views for a glimpse of the high-end life. It manages and rents luxury residential properties on a short-term basis, generating up to 30 per cent more revenue for homeowners than an annual lease.
“When homeowners look at the economics, they see they can generate more income and have more flexibility by renting out their apartments when they’re empty,” said Paul Mallee, co-founder of Maison Privee. “Owners are beginning to realise there’s an alternative to leaving their units empty.”
Nearly five years after Dubai introduced a law regulating vacation home rentals, the total number of listings in the emirate increased “substantially”, with active listings growing 161 per cent since 2016, when regulations eased to allow homeowners to rent residential homes on a short-term basis, according to a 2019 market report by property consultancy Knight Frank. Dubai’s holiday home market accounts for 2 per cent of Dubai’s total households, the highest proportion of all other key global hub cities, it said. Dubai’s holiday homes market has 10,766 active listings, comprising nearly half of the total properties registered on the online marketplace and hospitality service Airbnb. About 60 per cent of these are entire homes or apartments, 31 per cent are private rooms and the remainder are shared rooms.
Founded in 2017 by former Booz Allen Hamilton consultants Mr Mallee and Rami Shamaa, the idea of the hospitality start-up addresses a challenging real estate market combined with Dubai’s push to boost visitor numbers and a growing trend of tourists seeking to experience "local" living in destinations they visit.
“What we’re doing has flourished under the need of homeowners that can’t find long-term tenants,” Mr Shamaa said. “It’s a big opportunity for us.”
Tech companies such as Airbnb have given the start-up access to a wider pool of potential clients while Dubai regulations introduced in 2013 has allowed it to operate in a lucrative market.
“We offer guests a hospitality experience in which they can enjoy the benefits of a hotel and the comforts of a spacious apartment where you have privacy, you can cook and invite people over,” Mr Shamaa said. “It’s alternative hospitality.”
Maison Privee, French for "private home", has grown from 1,000 guests in its first year to 10,000 guests currently at its 100 properties dotted across Palm Jumeirah, Downtown and Dubai Marina ranging from villas to penthouses and one and two-bedroom apartments. They are listed on platforms including Airbnb, booking.com and propertyfinder.
Maison Privee's guests, who include football players and actors, range from visitors from the GCC and Russia to bankers or consultants in town for business or relocating and high-net worth individuals. Rent for a top-end one-bedroom apartment in Dubai Marina reaches Dh1,000 a night while a luxury villa can cost Dh10,000 per night.
The company, which handles cleaning and laundry services as well as check-in, takes 25 per cent of the revenues as a management fee but delivers 20 to 30 per cent more income to homeowners compared to a traditional lease, Mr Mallee said.
“We can tailor units to a Chinese or Saudi traveller,” he said. “If they want a Rolls-Royce to pick them up or a chef in-house, we can provide a tailored service.”
A slow-down in demand for long-term residential rentals has resulted in idle units in the market, which gives the start-up an opportunity for faster growth, according to Mr Mallee.
“There’s been a very strong growth trajectory and we don’t see that slowing down,” he said. “We see the opportunity to grow very quickly this year on the back of reduced rental demand and availability of the right type of stock."
Capitalising on these opportunities, the duo plan to add another 100 units to the portfolio this year and see potential for between 500 to 1,000 properties in Dubai in the long-run. Maison Privee’s portfolio will be valued at more than $300 million by the end of this year, the company said.
The business partners are also eyeing expansion beyond Dubai in regional and international markets popular with tourists, and with home-rental regulations and an available supply of units, where home-rental regulations are in place and the right type of properties are available.
Regionally, they are “very actively” seeking to expand this year in the Middle East where they see attractive opportunities in Egypt, Jordan and Oman, Mr Shamaa said. Within the UAE, tourist-friendly Ras Al Khaimah is on their radar.
Internationally, beach destinations such as Bali and Thailand beckon or southern European cities in Greece, Spain or Italy that attract more visitors, once the business hits its full operational scale.
“We see our model as globally applicable, we don’t feel constrained by geography,” Mr Mallee said. “It’s on our horizon, it’s about the timing and the right people then pushing it at the right moment.”
To fuel growth, Maison Privee secured series A funding when it raised $4 million in 2018 from undisclosed investors to hire more employees and invest in better technology. The founders, who initially funded the start-up, said they do not see the need for fresh capital.
The start-up, which is profitable, is expected to generate $5m in revenues this year compared to $2m last year as it capitalises on Dubai’s drive for more tourists and business travellers in Dubai for projects.
“As a consultant, I spent a lot of time in hotel rooms and no matter how nice they are, you get a bit stir-crazy after a while, so the idea of short-term rentals of residential properties grew legs in my mind,” Mr Mallee said. “Experiential travel is also growing and people are seeking residential properties to get the ‘live like a local’ experience in different countries.”
The UAE’s decision to ease visa regulations and introduce the 10-year visa will encourage more expats to buy apartments and make a return on their investment, Mr Shamaa said.
“We have solved a problem: instead of properties being idle and waiting for long-term tenants, we provide the possibility of living in the apartment then making an income when it’s not in use,” he said.
The business partners are open to expanding by potentially acquiring other businesses that offer the right talent, tech, properties or access to new markets.
The founders were “lucky” in the timing to start Maison Privee as the regulations were in place, an increasing supply of apartments were becoming available and Airbnb was gaining popularity, Mr Shamaa said.
In general hotels outperform the holiday homes market in terms of revenue per available room (RevPar) with the exception of the summer months when they are either on par or holiday homes outperform them, Knight Frank said.