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 2 0 1 5 - AU G 2 0 1 7
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 2020. 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 2017. 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 2017. 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
Dubai Average Daily Rates (ADR) $250 $200 $150 $100 $234 $218 218$ $204 $198 $227 $226 $201 $204 $182 $163 $155 198$ $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
Number of active listings in Dubai DEC 17 OCT 17 0 500 1000 1500 2000 2500 3000 3500 No. of active listings Dubai Market Revenue DEC 17 OCT 17 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Market Revenue (USD) 4
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