Investment with great prospects: short-term rental housing
Dubai's tourism industry continues to grow rapidly, reaching new heights every year. Despite the fact that Dubai today has 409 hotels and hotel apartments, providing a total of 37,150 rooms, the emirate continues to occupy the first lines among world tourist destinations in terms of hotel occupancy rate. In other words, there is a shortage of rooms in Dubai. In 2005, the occupancy rate of Dubai hotels averaged 86%, which allowed the small emirate to get ahead of such giants of the tourist business as New York (83%) and Singapore (80%). In accordance with the opinion of market experts, a similar state of affairs will continue in the foreseeable future.
It is highly likely that in 2010 Dubai will receive at least 15 million tourists annually.
In this situation, it becomes clear why short-term rental of residential premises is becoming increasingly attractive to investors. If you own an apartment or house, they can be used as a hotel, which will bring incomparably higher income than renting out for a year. At the same time, you don’t need to worry about the daily flow of business: for this, there is a special division of Better Homes that will take care of all the maintenance of your property and the guests living in them. You just have to make a profit.
Let's look at the real numbers:
Dubai Marina District
| Property Type / Standard Apartment | Reachable rental price per day (1) | Minimum achievable fill factor | Short-term rental income (2) | Long-term rental income |
|---|---|---|---|---|
| with 1 bedroom | $190 | 70% | $39090 | $21850-24600 |
| with 2 bedrooms | $245 | 70% | $50260 | $32780-35520 |
| with 3 bedrooms | $410 | 70% | $83680 | $49180-54645 |
Greens and Springs Areas
| Property Type / Standard Apartment | Reachable rental price per day (1) | Minimum achievable fill factor | Short-term rental income (2) | Long-term rental income |
|---|---|---|---|---|
| 1 bedroom / Greens | $165 | 70% | $33 510 | $20 490-23 220 |
| 2-bedroom / Greens / Springs | $220 | 70% | $44 680 | $25 950-30 055 |
| 3-bedroom / Springs | $275 | 70% | $55 850 | $32 790-36 885 |
Villas
| Property Type / Standard Apartment | Reachable rental price per day (1) | Minimum achievable fill factor | Short-term rental income (2) | Long-term rental income |
|---|---|---|---|---|
| with 4 bedrooms | $490 | 70% | $100 525 | $60109-81970 |
| with 5 bedrooms | $545 | 70% | $110 695 | $68 305-103 825 |
(1) Average achievable rental price on the basis of the price list for the day, week and month of residence (2) Income of the property owner minus 20%
Additional expenses of the property owner when renting out for a short term.
Apartments
| Lump sum payments | 1 bedroom | 2 bedrooms | With 3 bedrooms |
|---|---|---|---|
| Turnkey furniture | $8200-9570 | $10930-12300 | $15000-16400 |
| Furniture commission | 10% | 10% | 10% |
| Water and electricity connection including fees | $360 | $360 | $360 |
| Installation of satellite television and the Internet, including fees | $390 | $390 | $390 |
| Payment for facility maintenance services | $820 | $1 100 | $1370 |
| Annual transaction costs | |||
| Operating expenses | $656 | $820 | $985 |
| Water and electricity (taxed by the Municipality) | $1 150 | $1430 | $1970 |
| Internet and satellite TV | $1010 | $1010 | $1010 |
Villas
| Lump sum payments | With 3 bedrooms | 4 bedrooms | With 5 bedrooms |
|---|---|---|---|
| Turnkey furniture | $16400-17760 | $19125-25960 | $24590-32790 |
| Furniture commission | 10% | 10% | 10% |
| Water and electricity connection including fees | $360 | $360 | $360 |
| Installation of satellite television and the Internet, including fees | $390 | $390 | $390 |
| Payment for facility maintenance services | $820 | $1 100 | $1370 |
| Annual transaction costs | |||
| Operating expenses | $985 | $1315 | $1640 |
| Water and electricity (varies by decision of the emirate’s government) | $2 625 | $3935 | $4920 |
| Internet and satellite TV | $1010 | $1010 | $1010 |
The information provided illustrates that the potential benefits of renting out real estate for short-term leases are much higher, which makes it a more interesting alternative when planning real estate investments.
At the same time, you can use your property at any time for personal purposes, for example, when traveling on a business trip to Dubai or during a vacation with family and friends.
What could be more profitable? Call Better Homes!
