Business

Dubai holiday homes serve a new purpose - leasing to residents

Dubai holiday homes serve a new purpose - leasing to residents

Dubai: Holiday homes in Dubai are now serving a new purpose – be the temporary address for those residents who prefer to rent by the month. And these days, there are many wanting such a flexibility on their payments.

“The average annual rent for a one-bed apartment in Dubai Marina is Dh65,000-Dh70,000, translating to Dh6,000 a month or so,” said Sanjay Chimnani, Managing Director, Raine & Horne. “For that exact cost, a fully furnished holiday home (including utilities) can be rented on a monthly plus.

“Subject to negotiation, most holiday home operators are allowing Du and Dewa free. There is 5 per cent VAT and another fee, which is Dh10 per day for the first one month.”

Demand for holiday homes from residents is a sign of the times – those signing up could be in-between jobs or searching for a new one. Rather than be stuck to a one-year rental contract, holiday homes offer them the short-stay option and within their budgets. Of course, there is also the monthly payment option, which is a most compelling reason right now.

A new lease of business

For holiday home operators, this demand from within has come at a most opportune time. Through the last three months, they had seen their bookings from overseas come down to nothing, as COVID-19 put a halt to flights. Even when they resume, these businesses are not hopeful of demand returning any time soon.

This is why interest from residents is giving holiday homes a lift, at least for now. The best part is these tenants can exit their contract without the hassles associated with a longer term residential lease.

On longer holiday home leases, they need to pay a 10-day penalty for an early termination, while in a similar situation they have to shell out two months’ rent as penalty for breaking a 12-month contract.

“There is no need to register an Ejari or DEWA with a holiday home,” said Anna Skigin of Frank Porter, an Airbnb management company in Dubai. “The process of moving in and out is seamless.”

How much do holiday home stays cost?

Holiday home rates have seen a reduction in recent weeks, given the total breakdown in bookings coming from overseas visitors. These are now comparable to annual residential leases when split into monthly installments.

Plus, these units are ready to move in. Cleaning will be done once or twice a week for a fee.

Before COVID-19 struck, a one-bedroom holiday home in Dubai Marina or the Palm Jumeirah could be rented for Dh9,000-Dh12,000 per month during May and June. However, lease rates are down to between Dh5,000-Dh9,000, depending on location, number of bedrooms, quality of fitouts, etc..

“The numbers have been increasing for lets of one-month plus,” said Skigin. “The profile of these guests varies. It is anyone who is currently in transition - either between jobs, between countries or between homes.

“It is also UAE residents looking for a short getaway - we are seeing an increase in this “domestic tourism” at the moment.”

10,766

The number of active holiday home listings in Dubai out of a total of 20,395 properties registered on Airbnb, according to Knight Frank.

What of hotel apartments?

Hotel/serviced apartments also offer short-term rentals. However, the charges are different - tenants will need to pay 3.5 per cent municipality feess (this was reduced from 7 per cent for three months), a 10 per cent fee service fee and 5 per cent VAT.

Serviced apartments have been seeing a surge in demand for short-term lets. The InterContinental Dubai Marina Residence Suites, a 196-room property, is catering to both short and long-stay guests.

“When Dubai went into lockdown, many residents relocated to short-term rentals – perhaps they are unsure about how the future will unfold and do not wish to extend their long-term contracts,” said Michele Ristuccia, Director of Sales and Marketing, InterContinental Dubai Marina Residence Suites.

“We had a lot of bookings from people who couldn’t fly out of the UAE. People who recently moved to Dubai for work have also booked short-term stays.

“They’re not looking for a long-term commitment right now; just something temporary until this quietens down or until they are able to get more clarity.”

However, a branded serviced apartment can be more expensive than comparable holiday homes. A one-bedroom apartment at InterContinental Dubai Marina Residence Suites can be rented from Dh11,000 a month and includes service charge, municipality fee and VAT.

“We are flexible with rates since we are mindful of the current situation our guests find themselves in,” Ristuccia said.

Whatever be the case, holiday homes are serving a purpose, and if this demand from residents continue for a while, it will have eased the businesses’ cashflow concerns, even partially. Or until such time bookings and flights from overseas return to normal.

But until then, “Whoever’s lease was coming to an end by March 15, they are moving into holiday homes,” said Chimnani.

Holiday home rentals see a softening
There is a 25-50 per cent reduction in lease rates set off by sharply reduced demand from overseas visitors. Even within a community, there could be a variance in rates.

Holiday homes in Jumeirah Lakes Towers and Dubai Marina can be rented from Dh5,000 a month. The same applies to units in Jumeirah Village Circle and Dubai Sports City.

Rates for holiday homes in Downtown are also on par with Dubai Marina. The most expensive holiday homes in Dubai are on the Palm, where a three- to four-bedroom villa can be rented for Dh11,000 a month.

City Walk holiday homes are also expensive, costing the tenant between Dh11,000-Dh15,000 a month. Before the pandemic, they were upwards of Dh20,000 a month.