Rental property in Dubai is in great demand. The lion’s share of the urban population consists of foreigners, for whom it is much easier to rent property than to buy. And this is not to mention the year-round flow of tourists. Under these conditions, buying a house for rent is a sensible idea. But in order for the investments to be as profitable as possible, it is important to assess correctly what type of property and in which area should be acquired.
Before you buy a property in Dubai, you will have to decide how you intend to use it. If a dwelling is purchased for personal use, it must be based on personal needs and preferences, the existence of an interchange, and appropriate social infrastructure. If you buy a property in order to rent it out (both temporarily and year-round), you will have to carry out a more in-depth analysis.
When buying a rental property, it is necessary first of all to target the preferences of potential tenants. This applies not only to the choice of area and type of housing but also to the number of bedrooms, nearby schools, day-care centers, etc.
When choosing a specific type of real estate for rent, it is important, first of all, to focus on the interests and needs of the tenants. Even if the nominal rates of return on private houses are higher, what’s the point if it is empty.
The ratio of apartments to houses in the modern rental market of Dubai is as follows:
Apartments and country houses with three or more bedrooms are hardly popular for short-term rentals. If you intend to rent your property for less than a month, then have to consider more compact options with one or two bedrooms.
According to the analysis of the rental market in the last 6 months of 2019, one-bedroom apartments were the most popular among potential tenants. This trend is explained quite simply – in Dubai lives and works a huge number of foreigners and young couples who do not yet need large-scale multi-bedroom apartments or luxury villas.
However, small studio apartments, despite their compactness and availability, gradually lose popularity. This trend is largely related to the general decline in property prices over the past two years. Even renters with limited budgets can now afford more comfortable and spacious housing. Moreover, the difference in the cost of a one-bedroom studio and one-bedroom apartments per month is no longer so large.
In terms of location, the central areas of the city have traditionally been the most sought-after and profitable:
The second most popular apartment among tenants is a two-bedroom and a three-bedroom apartment. In most cases, two or more bedroom apartments are chosen by families with children. A key priority for such tenants is the proximity of schools, children’s centers, and hospitals. The most successful areas for the purchase of two-bedroom apartments will be:
Despite the popularity of the city apartments, the rental of country villas in Dubai has also not lost its relevance. The highest demand in 2019 was for three-bedroom villas. Most of these houses were rented in the areas of Arabian Ranches, Mira, Mira Oasis, Town Square, Villanova, Serenia, and Cherrywood.
Villas with 4 and 5 bedrooms are less frequently rented. But they also have their connoisseurs. Dubai Hills and Meydan One are the most profitable locations for such large-scale buildings.
Two and three-bedroom villas are the most popular. These are often chosen by friends or colleagues who are comfortable living together or by families with one/two children.
According to the Airbnb platform, since 2010, 20,395 real estate leases have been registered in Dubai, of which 10,766 were vacation homes. As of the end of 2019, the market of country houses was 2% of all Dubai properties. The highest density of villas is registered in Palm Jumeirah, Marina and Downtown Dubai, Arabian Ranches, and Barsha South.
The most advantageous way to rent out a country property is to rent on weekends and holidays. Country houses can be rented both for permanent residence and for recreation with family and friends. But it is difficult to find a tenant who can rent a large-scale villa for a month or more under current market conditions.
The country house is often a more private and comfortable alternative to the hotel. But there are both disadvantages and advantages. On the other hand, the private house provides more privacy. Tenants can invite guests, cook for themselves, etc. On the other hand, the owners of country houses are unable to provide 24-hour service.
Only 55% of homeowners provide instant booking. Besides, unlike hotels, you don’t get 24-hour service. The average response time for private homes is 6 hours.
When buying real estate for the purpose of its further renting out or for living, it is important to correctly assess its profitability and demand from potential tenants. Today, the following trends are observed in the Dubai rental market: