Income from Rental Property in Dubai: Property Types and Features

12:09 am  |  18.11.2023

Earning income from rental properties has been quite popular in Dubai in recent decades. Renting in Dubai guarantees a return of 4 to 9 percent, according to analytical data in 2023. This area is developing rapidly every year. The advantage of investing in real estate is a high percentage of income, reduced risks, protection of capital from inflation, as well as favorable conditions for owners, and terms of concluding a contract. We will consider the key points that investors and tenants planning to invest their savings in UAE real estate should pay attention to.

Question of Relevance

To invest capital in this area, it is necessary to determine the segment of the target audience and the degree of demand for rental housing in the selected area. Projects in Dubai are presented in a wide variety of locations and price segments.

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Let’s explore the different groups and forms of employment presented in the Emirates:

  • Resort real estate segment: Remains relevant and in demand all year round. The target audience includes tourists from around the world, covering various income levels and social categories. The average statistics range from 5 to 17 million tourists per year. Resort projects constitute the largest part of the Emirates real estate market. This real estate segment experiences spontaneous development associated with various economic and political conditions, as well as the general epidemiological situation in the world.
  • Real estate segment targeted at expats: This targets individuals looking for permanent housing in Dubai, considering the UAE as a permanent residence. This audience seeks large residential premises of more than 2 rooms, both for rent and purchase. Mostly, these are large and small families interested in apartments and penthouses in affluent residential areas with developed infrastructure. The percentage of expats is growing every year.
  • Real estate segment is targeted at migrants and businessmen: Targets people of middle and senior management with various qualifications and professions. In recent years, the population of the Emirate has increased by several hundred thousand, and this figure is growing exponentially.
  • The segment of middle and high-level immigrants focused on their own business: Over the past few years, the number of foreigners has significantly increased. Statistics show that most visiting businessmen stay in business districts or central areas of the emirate with developed infrastructure. This target audience consists of single men and women seeking comfortable housing for remote employment. The premises must be functional and comfortable for both work and living.
  • Legal entities looking for rental premises to organize a business: This segment is interested in commercial real estate for various purposes, including retail, exhibition, and warehousing. The key criterion for selecting real estate in the emirate is a large area and developed infrastructure. Also, in the last decade, high-quality warehouse and sorting space has become relevant due to increased interest in the field of online commerce.

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Types of Property Rentals in Dubai

Long-Term Rental: The most popular type of rental. The contract is concluded for a period of one to several years. The income for the owner in this case varies from 4 to 8% per year. For payment, remote services of the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA) are used.

Short-Term Rental: A popular rental option. Allows tenants to receive the largest percentage of profit. Investors receive up to 2 times more income than with long-term rentals. The property owner receives a license for a year and agrees with the management company. The company’s retention percentage (commission) is up to 20% of the established rental amount. The rental period can vary from several months to 1 year.

“Weekend” Rental: This type of vacation rental has been gaining popularity recently. Short-term rental of real estate for a “weekend” allows you to get high profits. Tenants offer different types of real estate: hostel rooms, apartments, penthouses, and villas.

“Weekend” rental is popular during peak tourist periods in the emirate. Rental conditions are negotiated individually. The disadvantage is the high costs of maintaining the property.

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In addition to their distinctive features, all types of rentals can be characterized by certain properties. Here are some things to keep in mind when renting a property in Dubai:

  1. The conclusion of a contract between the tenant and the landlord takes place without guarantors and witnesses.
  1. The minimum period for concluding a real estate rental contract is 1 year. Landlords rarely agree to minimum terms; the situation must be justified. Any flexible conditions are discussed individually.
  1. In case of non-compliance with the terms of the contract and premature departure, the tenant has the right to demand compensation in the amount of two months’ rent.
  2. When renting apartments and apartments, the landlord undertakes to maintain all public areas. These include corridors, swimming pools, sports grounds and more.
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