DUBAI HOLIDAY HOMES OVERVIEW AIRBNB MARKET

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1 DUBAI HOLIDAY HOMES OVERVIEW AIRBNB MARKET P E R F O R M A N C E A N A LY S I S AU G AU G

2 Overview In April 2016, a new Executive Resolution No. (1/2016) relating to the Second Edition of the Dubai Holiday Home Rental Regulations was introduced relaxing the rules surrounding holiday home rentals allowing both homeowners as well as tenants to apply for a holiday home license without the need to go through an approved Dubai Tourism operator. Dubai Tourism subsequently signed an agreement with Airbnb, a community-driven hospitality company, to help promote responsible hosting and help grow and diversify tourism in the emirate, in line with Dubai s strategy to attract 20 million visitors per annum by Since its inception in 2008, Airbnb has become a trusted community marketplace for people to list, search and book unique accommodation around the world. To date, the company has welcomed over 200 million guests in more than 65,000 cities across 191 countries. Research by Chestertons has revealed rather than competing with Dubai s hospitality sector, the Airbnb concept is complementing the offering within the emirate by providing an alternative travel experience, particularly appealing to millennials. Regulations state that only whole/integral units can be marketed and they are the focus of this paper. The relaxation in regulations has ensured a marked increase in the number of listed Airbnb units available, increasing 161% from 1,241 units in August 2015 to 3,249 units in August Demand has supported the increase in available units with average occupancy levels topping 57% during Dubai s peak season. During the low season months of June, July and August 2017, occupancy averaged nearly Average daily rates have also retained consistent year-onyear levels: US$153 in August 2015; US$154 in August 2016 and US$154 August The first three months of 2017, denoting the peak tourism season, witnessed ADR of US$226, US$201 and US$204 respectively. Many real estate investors are diversifying into the holiday home rental market because of an easing of regulations combined with higher returns when compared to the traditional rental market, average investors can expect up to 5% returns when compared to long-term leasing rental yields. New regulations and an increase of Airbnb supply will help grow and diversify tourism, increase choice and attract new guests to the emirate while also providing investors with an alternative income stream. 2

3 Dubai Average Daily Rates (ADR) $250 $200 $150 $100 $234 $ $ $204 $198 $227 $226 $201 $204 $182 $163 $ $ $157 $157 $197 $196 $196 $206 $190 $154 $169 $153 $152 $154 $149 $50 $0 Dubai Median Occupancy 60% 50% 44% 52% 50% 45% 42% 46% 57% 57% 42% 45% 30% 36% 52% 37% 39% 37% 50% 20% 30% 10% 23% 0% SEP 15 NOV 15 DEC 15 JAN 16 MAR 16 MAY 16 JUL 16 SEP 16 OCT 16 NOV 16 JAN 17 MAR 17 MAY 17 JUL 17 SEP 17 SEP 15 NOV 15 DEC 15 JAN 16 MAR 16 MAY 16 JUL 16 SEP 16 OCT 16 NOV 16 JAN 17 MAR 17 MAY 17 JUL 17 SEP 17 3

4 Number of active listings in Dubai DEC 17 OCT No. of active listings Dubai Market Revenue DEC 17 OCT ,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Market Revenue (USD) 4

5 Contact Us Nick Witty, Bsc (Hons) MRICS Managing Director - MENA nick.witty@chestertons.com Mamoon Durrani Director, Valuations & Advisory - UAE mamoon.durrani@chestertons.com Ivana Gazivoda Vucinic Head of Advisory and Research - UAE ivana.vucinic@chestertons.com Vladimir Cvetinovic, MRICS Associate Director, Valuations & Advisory - AUH vladimir.cvetinovic@chestertons.com Russell Owen Head of Agency - UAE russell.owen@chestertons.com Khizar Hayat Head of Plant and Machinery - UAE khizar.hayat@chestertons.com MENA HEAD OFFICE 1802, Blvd. Plaza Tower 1 Sheikh Mohammed Bin Rashid Blvd., Downtown Dubai P.O. Box , Dubai, United Arab Emirates Office Fax uae.enquiry@chestertons.com DUBAI OFFICE 106, Rasis Business Center, Al Barsha 1 PO Box , Dubai, United Arab Emirates Office uae.enquiry@chestertons.com ABU DHABI OFFICE Office M01, Mezzanine Floor, Al Ghazal Building, Khalifa Park P.O Box , Abu Dhabi, United Arab Emirates Office Fax abudhabi@chestertons.com Disclaimer: All articles and data presented herein is intended for information purposes and has been compiled from sources deemed reliable including the Valuations and Research Department of Chestertons, sales and leasing staff, published data, and secondary sources. Though information is believed to be correct, materials presented is subject to errors, omissions, changes or withdrawal without notice. 5