Dubai developers can make hay with holiday homes
Rather than be fixated on off-plan sales or longer term rentals, Dubai’s developers could aim big in another category — holiday homes. It was The Department of Tourism and Commerce Marketing has launched a plan to develop a timeshare market in Dubai to help broaden its tourism base. And within this space, developers have the means to play their part.
“Although the long-term occupancy trend remains healthy in Dubai, it has slowed down in the past two years due to the massive supply of properties,” said Firas Al Msaddi, CEO of fäm Properties. “By embracing the concept of holiday homes and introducing legislation, the Government has created a new revenue stream for landlords. They can have tourists as tenants for the first time and this increases occupancy rates.”
The new proposals could increase rental revenues for landlords and even help attract new investors. Holiday homes can bring up to 15-25 per cent more revenue than long-term rentals, Al Msaddi added.
“It’s a perfect example of how Dubai reacts promptly to global market challenges and continues evolving, not just to keep up with the world’s leading cities, but to overtake them by being consistently creative and innovative.
“Even in cities like London, Airbnb is not directly a government-regulated business. The fact that it is 100 per cent regulated here, by the DTCM as well as the Dubai Economic Department, shows how far ahead Dubai is in its thinking.”
Fäm Properties has signed up assets of more than Dh300 million under a holiday homes license from DTCM, for properties at the City Walk. The company plans to grow its total assets under holiday home management to Dh1 billion between City Walk, Downtown and Dubai Marina by year-end.
“Although we don’t have years of historical data on holiday home returns, the right property with the right location tends to generate 15-25 per cent higher income for landlords compared with long-term rental,” the CEO added.
“At times like the present, an over-supply of residential property means it takes longer to find tenants. These factors will persuade more landlords to choose the holiday homes option. They know they won’t be tied up by tenants’ rights of at least two year’s notice to vacate, or be held back from increasing rent for the first two years.
“But not every property can be successful as a holiday home. We sometimes advise clients to stick to long-term rentals if we don’t believe their property has the right location, connectivity, size, view, layout or type.”
Factbox: Turning a property into a holiday home
* Landlords intending to sell can earn rental income up to the last day of ownership. To generate regular income, they need to ensure daily up-keep. A higher level of maintenance compared with long-term rental property makes holiday homes more attractive to buyers.
“Once a healthy income trend is built over one or two years, the property becomes a major target for investors looking for high income generating properties,” says Al Firas Al Msaddi of fäm Properties.
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