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In which areas of Dubai are the most profitable apartment rentals?

04/12/2024 224
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In Dubai, the real estate rental market is a well-coordinated system that unites owners, tenants and intermediaries-brokers. In this market, one of the key points is the absence of a tax on rental income. However, this rule does not apply to the property of legal entities.

From the point of view of investments, the real estate market in Dubai continues to grow, actively developing tourism, making it an attractive place to rent real estate. This attracts a lot of investors who plan to earn income from both short-term and long-term rentals in order to obtain stable passive income.

One of the main reasons for renting apartments on a short-term basis is the desire to increase income, have control over the condition of the apartment, as well as the speed and ease of exit from investments in case of sale of the apartment. In terms of financial benefits, short-term rentals are in most cases superior to long-term rentals. Under optimal conditions, a short-term lease can bring up to 15% higher profitability than a long-term one. Our company provides assistance to property owners in renting apartments, helping at all stages. Moreover, we provide clients with assistance in processing documents for obtaining a residence permit and related documentation, as well as assist in opening bank accounts.

When choosing an area to rent an apartment in, it is important to consider many factors. For example, you need to define a leasing strategy and consider timing preferences. In addition, home values ​​and rent play a key role in calculating ROI. It is also worth paying attention to the infrastructure and views from the windows, which can affect the attractiveness of the property for rent. It is also important to pay attention to the developer and the quality of construction.

Popular areas for short-term apartment rentals in Dubai are: Dubai Marina, Downtown, Jumeirah Beach Residences, Palm Jumeirah, Jumeirah Lake Towers, Business Bay, Shobha Hartland, Dubai Hills. Here you can find mid-price and premium class apartments.

Area selection criteria

When choosing an area for short-term rental apartments, it is important to consider several key criteria that will help increase your return on investment and create a stable stream of rental payments.

First, you should pay attention to the location and accessibility of the selected area. The attractiveness of the property for potential tenants directly depends on this. For example, apartments on the coast are always in demand for rent. A successful home location, spacious layout, large area, quality furniture and renovations significantly increase the likelihood of receiving a high income. Apartments chosen wisely for subsequent rental can bring a yield of up to 10% per annum.

Secondly, it is important to consider the average rental cost by area. Rental prices can vary significantly in the same area depending on the location, quality of renovation and furnishings, the building itself and the amenities offered. 

It's also worth paying attention to potential rental demand in different areas. Properties in prime areas such as Downtown and Palm Jumeirah tend to yield better returns on short-term rentals than long-term rentals. The most popular places for daily rentals are in the city center, on the coast and in entertainment areas. For example, areas along the Dubai Waterfront, such as Dubai Marina, attract renters due to their stunning views and proximity to the beach. Downtown Dubai and Business Bay are also popular due to their convenient location close to offices, transport and shopping and entertainment centers such as the Dubai Mall. Even properties in less desirable areas become in demand during public events and the holiday season.

The level of infrastructure also plays an important role when choosing an area for renting apartments. The presence of schools, shops, restaurants, parks and entertainment centers can significantly increase the attractiveness of an area to potential residents.

It is also important to assess the development prospects of the area. New construction projects, planned infrastructure improvements or business developments could have a positive impact on property prices and rental demand in the future.

The best areas for short-term apartment rentals

One of the main symbols of Dubai is majestic skyscrapers with panoramic windows, enveloped in the rays of the sun. For short-term renters, the emirate offers a variety of areas, from impressive complexes with exquisite terraces and views of the Arabian Gulf, to more affordable options in traditional parts of the city.

Dubai Marina

Dubai Marina is an attractive area that is in great demand among tourists and local residents. There are tall skyscrapers that are beautifully reflected in the water. This area is attractive for its artificial harbor where luxury yachts can be seen. Dubai Marina has all the conditions for comfortable living and recreation, thanks to which it is constantly developing and remains one of the most prestigious areas of the city.

The main attraction of the area is a large canal of more than 3.5 km, extending into the sea at both ends. Along the canal embankment there are many restaurants and cafes, as well as cycling and jogging paths. There is also a marina and the Dubai Marina Mall with many shops and a cinema.

Dubai Marina's location is very convenient with easy access to Al Sufouh Rd and Sheikh Zayed Rd, connecting all 7 emirates. In the evening, the area will be transformed and become even more attractive with a light show of high-rise buildings and the opportunity to relax on JBR Beach or visit bars with magnificent views of the bay and Palm Jumeirah.

Renting an apartment for a short term in Dubai Marina is more profitable than for a long term. Average rental costs can start from AED 70,000 (about $19,200) per year for one-bedroom apartments and from AED 110,000 (about $30,000) per year for two-bedroom apartments. Prices vary depending on the level of the building, renovation and size of the apartment. 

For short term rental apartments in Dubai Marina, prices may vary depending on the type and size of the property, as well as seasonality. During the fall, winter months, and early spring, prices are at their highest, while rental prices become much lower as summer approaches and into the summer. For example, studio rental prices can start from around 150 AED and go up to 500 AED per night during low season. If we consider renting a one-bedroom apartment, the amount can range from 250 AED and reach 1000 AED per night in the low season. Accordingly, in high season prices can be 30-40% higher

Downtown Dubai

This area is the center of the city, where there is a lot of activity, entertainment and high vitality. Here you will find tall skyscrapers, classic Arabic architecture and many entertainment and shopping centers.

Downtown Dubai offers many upscale shopping malls, popular restaurants and attractions. Of particular interest is the Dubai Opera, which offers a variety of activities for guests. In the evening, the streets come alive and the area turns into a place with neon lights and a vibrant atmosphere.

Downtown Dubai is an area for active people who love to live life to the fullest. There is always something going on here, which makes it attractive to both tenants and investors. Investing in real estate in this area can bring high returns due to its prestige and amenities. It will be interesting for young people, businessmen, tourists and families with children and pets.

Rental costs in Downtown Dubai can be quite high. For example, for a one-bedroom apartment, rent can reach 480 thousand AED per year. However, given the prestige and amenities of the area, it may be a worthwhile investment.

The area is also famous for its world-class landmarks such as the Burj Khalifa, The Dubai Mall and The Dubai Fountain. It is also home to Burj Park, which hosts various events and festivals.

Palm Jumeirah

Palm Jumeirah attracts attention with its architecture and sophisticated style. This island is the largest in the world and is recognizable not only from the mainland, but also from water and air. Its shape resembles a palm tree surrounded by a crescent-shaped breakwater, creating ideal sandy beaches and beautiful views of the warm waters of the Arabian Gulf. 

Palm Jumeirah offers a variety of short term rental properties. Here you can find both stylish studios and luxurious villas. The rental price for a one-room apartment ranges from 110,000 to 350,000 AED per year, and for two-room apartments - from 160,000 AED to 2,500,000 AED. There are also three and four bedroom apartments in the area, and the cost of spacious villas starts from 800,000 to 6,000,000 AED per year.

Shopping centers, restaurants, entertainment venues and many other amenities are available to residents and visitors to the island. In addition, the area has good transport accessibility and proximity to the main attractions of the city.

Jumeirah Beach Residence (JBR)

Jumeirah Beach Residence is a beach community located in the popular Dubai Marina area. This location attracts residents looking to enjoy a luxurious lifestyle on the Gulf Coast. JBR's main attractions are the 1.7 km long beach and The Walk, where you can stroll, dine at cafés, gourmet restaurants and shop in boutiques.

The area offers many apartments for short-term rentals, and the demand for such housing greatly exceeds the supply. For example, renting a one-room apartment for a year can cost an average of 100,000 AED, and a two-room apartment - from 130,000 AED. 

The infrastructure of the area is developed at a high level, which makes it attractive for residents. It has everything you need for a comfortable life: beaches with developed infrastructure, shopping centers, restaurants, entertainment venues, proximity to the Blue Waters and Dubai Marina areas and much more. Thanks to this, Jumeirah Beach Residence remains one of the most desirable places for short-term rental properties.

Sobha Hartland

Sobha Hartland is an area of ​​Dubai, surrounded by nature, parks and close to the Downtown area with attractions. It is suitable for short-term rental apartments due to its tranquil and picturesque surroundings.

One of the advantages of Sobha Hartland is the variety of accommodation types, from studios to spacious multi-bedroom apartments and villas. Rental prices in Sobha Hartland are quite attractive. For example, one-bedroom apartments start from AED 75,000 per year. These prices make renting in Sobha Hartland more affordable compared to other areas of Dubai, and the proximity to major attractions and developed infrastructure contribute to high demand.

Sobha Hartland has shops, salons, cafes and other amenities, and a large shopping center, Meydan Mall, is being built nearby. However, it is worth noting that public transport in this area is not yet developed. For those with personal transport, this is not a problem, since the area is easily accessible along wide highways. However, for those who prefer to use public transport, this may be a disadvantage.

Practical tips for property owners

When renting an apartment for a short period of time through a management company, you can get an income up to 15% higher than with a long-term lease. This is due to the ability to respond quickly to market changes and the lack of reference to the RERA index.

An important aspect of successful rental of real estate is effective marketing. This is not only the placement of ads, but also the presentation of the object in the best light. The distinctive features of the property should be clearly highlighted in order to attract the attention of potential tenants.

In addition, finding reliable and responsible tenants plays an important role. To do this, it is necessary to conduct a competent advertising campaign and work out in detail all aspects of the presentation of real estate on the market.

Recommendations:

  1. It is important to maintain contact with tenants and listen carefully to their requests to reduce turnover and increase retention.

  2. Regularly monitor the condition of the property and carry out repairs and maintenance to prevent future problems.

  3. Carefully select service providers that provide high levels of quality and efficiency.

  4. Ensure the safety of your property by regularly checking its condition and taking appropriate action.

  5. Develop customer support policies to improve tenant satisfaction and retention.

  6. Provide transparent reporting so tenants understand how their funds are being used and establish trust in you.

Conclusion

The article presented the key points that determine the benefits of investing in rental properties in various areas of Dubai. It is important to choose the area correctly, taking into account its location, rental costs, demand for housing, level of infrastructure and development prospects. Some areas, such as Downtown, Business Bay, Dubai Marina, Palm Jumeirah and Jumeirah Beach Residences, offer high returns from short-term rentals due to high demand and prestigious status. Therefore, for property owners interested in increasing their income through rental apartments, it is recommended to carefully study these areas and take into account tips for choosing the right strategy. 

To increase your income, you can contact our company RAD Holiday Homes. We help with short-term rental of apartments, and together with Bluewhale Properties we offer a full range of services for investing in real estate in Dubai - from searching for a property to transferring it to management. Don't miss the opportunity to increase your income and ensure stable investment in real estate in one of the most promising cities in the world.

Tip

What are the requirements for tenants in Dubai?

A long-term tenant in Dubai can only be a person or company with resident status in the UAE. This may be a UAE national or a foreigner with a resident visa. For legal entities, appropriate registration in the UAE is required. There is no such rule for short-term rentals; any person, both a tourist and a resident and citizen of the UAE, can rent for a short period.

What expenses does the owner bear when renting out an apartment in Dubai?

For short-term rentals, the owner typically bears the costs of paying an agent's fee to find a tenant, homeowners' association fees for maintaining the apartment complex (if applicable), utility and internet costs, and taxes on rental income (if applicable). For long-term leases, the owner pays fees to the owners' association for maintenance of the residential complex (if applicable), and an agent's commission for working with the tenant for a year (in the event that the investor owner himself cannot deal with current issues).

Are there any restrictions on rental prices in Dubai?

When concluding a real estate lease agreement, the parties can agree on any conditions that comply with the law. There are no direct restrictions on the rental price in the contract. However, there are rules on long-term leases about rent increases when the contract is renewed, including limits on increases in the first two years. When reviewing long-term leases, the RERA index is used to determine average rental rates. There are no restrictions for short-term rentals; the price is set based on the current market situation.

Is it possible to rent out property in Dubai without agents?

In Dubai, it is almost impossible to do without the help of agents when renting or renting real estate. Real estate agencies or property management companies play a key role in connecting owners and tenants, providing access to market information and helping close deals.