fäm Properties plans to grow its total assets under holiday home management in Dubai to AED1 billion by the end of this year
Dubai government initiatives driving the growth of short-term property rentals show an innovative city prepared to tackle global market challenges head on, a real estate chief said today.
Earlier this month, the Department of Tourism and Commerce Marketing (DTCM) launched a plan to develop a timeshare market in Dubai to help broaden the tourism sector.
Firas Al Msaddi, CEO of fäm Properties, says it is the latest in a series of government measures which are boosting Dubai real estate by increasing rental revenue for landlords and attracting new investors. Holiday homes can bring up to 15-25% more revenue than long-term rentals, he said.
“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,” he says. “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.”
Adds Al Msaddi: “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% regulated here, by the DTCM as well as the Dubai Economic Department, shows how far ahead Dubai is in its thinking.”
Al Msaddi says fäm Properties currently has signed up assets of more than AED300 million under its holiday homes license from the DTCM at City Walk in Dubai. The company plans to grow its total assets under holiday home management to AED1 billion between City Walk, Downtown and Dubai Marina by the end of this year.
Says Al Msaddi: “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% higher income for landlords compared with long-term rental.
“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.”
Landlords intending to sell can earn rental income up to the last day of ownership. To generate regular income, they need to ensure excellent daily up-keep. But 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 Msaddi.
“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.”
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