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Over the past year and a half, the tourism sector of the United Arab Emirates has significantly recovered, overcoming the obstacles that were put before the industry by COVID-19. Along with the new growth of the tourist market, the hotel rental market and the short-term rental housing market have also entered the recovery. Both are now going hand in hand, trying to master the ever-increasing volume of tourists to the country.
However, the «post-pandemic» tourist and tenant differ markedly in their preferences from tourists and tenants who visited the country in 2019. Preferences have changed in where people want to travel, what they are looking for, and what amounts they are willing to spend. In addition to this, the development of the remote employment market also affects. Lots of people today prefer to work from home, vacation spots and other countries.
The volume of tourists arriving in the UAE in the first quarter of 2022 significantly exceeded the figures of the same period in 2019, becoming one of the best quarters in the history of observations. In the first six months of this year, Dubai alone attracted more than 7.12 million. Tourists — 183% growth in annual terms.
An additional factor in the growth of tourism in the region is the upcoming FIFA World Cup in Qatar, which is scheduled for November-December 2022. Not only hotels, but also ordinary homeowners are preparing for this event. According to available data, more and more landlords are preparing to switch from annual to short-term lease contracts.
Express flights to and from Qatar are already being prepared in the UAE, from Dubai and Abu Dhabi, which will be able to provide tourists with quick access to key football events and an operational way back. The World Cup is also superimposed on the highest point of the tourist season in the UAE and the nearest countries.
Despite the fact that its weak regulation in most of the world's leading markets often plays against the short-term rental segment, the demand for such an offer is steadily growing from year to year. The main tenants on the market are mid-level business professionals, various consultants and office workers, families on vacation/on vacation.
Short-term rental housing is slowly but surely winning back the market from hotels, and this is happening for the reason that hotels simply cannot provide «home comfort» to tenants. They are arranged differently. They feel differently and many people do not feel comfortable in such an environment. Having an alternative to rent a full-fledged apartment or house for a few days, tenants will rather prefer it to rest in even the most comfortable hotel. Rentals also usually provide more flexible payment schemes and give access to a more diverse property to live in.
On the other hand, it is much more profitable for tenants to invest in rental housing rather than hotels, since it brings noticeably higher returns on investment. According to some analysts in the MENA region, short-term rentals bring investors an average of 10-15% more revenue than hotels.
Both sides of the market, supply and demand, see many advantages of short-term rentals and it is predicted that the segment will only continue to grow in 2023. It is known that at the beginning of the second half of 2022, more than 10,000 ads for rental housing were opened in Dubai alone. Occupancy rates of rented premises are growing. So, from December 2020 to December 2021, this metric showed an increase of 32%. The degree of daily employment of objects increased by 15-28%, and monthly — by 94%.
It is also beneficial for buyers that the short-term rental market is quite young. Market participants compete not only with each other, but also with other market segments, including hotels. All this creates high competition and much more favorable offers for potential tenants than the latter can get in traditional rental segments.
