Get out of cash now and invest in Dubai’s booming Airbnb market
An Airbnb explosion in Dubai may singlehandedly ignite a challenged real estate sector in the Emirate, where prices are at their lowest in years.
“The time to invest in a Dubai property and put it out for short-term rent is now! The prices, mortgage rates, and developer payments plans are at their most attractive – ensuring you will get the best deal if you spend a little time looking,” said Anna Skigin, CEO of Frank Porter, a prominent UAE Airbnb management company.
While real estate buying is suffering, short-term renting is exploding, and it’s prompting investors to buy for the purpose of some lucrative Airbnb income.
Anna advises prospectors to “do your research, take your time, and seek help when it comes to buying your first, second or third rental property.”
In an interview with AMEinfo, Anna provided insights about the business of meeting the needs for full-service expertise in Airbnb management, hosting, and property management.
“Since starting this business, people are actually investing in properties, so people call us for advice on where to buy. We are the unofficial advisors, and while we don’t charge money for that, hopefully, once people heed our advice to buy in recommended areas, they would look for us to manage their rentals,” quips Anna.
How best to invest in an Airbnb home?
“When investing in a new home for the purpose of renting it out short-term, the first thing to think about is size,” Anna says, “and particularly single-family homes since it’s the simplest and most risk-free way to get started.”
“The upkeep is easier than multi-family or commercial properties and, with a single tenant, there doesn’t tend to be as much wear and tear on the property. With that in mind, the team advises purchasing studios, one- and two-bed properties,” Anna adds.
The second tip is to invest in an area that will bring a high return.
Anna believes that in Dubai, buying in the heart of an area is key.
“Investors should be looking at places that are close to amenities like malls, the beach, and tourist hot spots, such as Jumeirah Beach Residence, Downtown Dubai (preferably close to Burj Khalifa), next to a golf course (which is key for some holidaymakers) or near the beach,” Anna says.
“Also, consider picking a location close to public transit; rental properties near the Dubai Tram or Dubai Metro normally perform better.”
A 1 bedroom property can net owners AED125,000 to AED160,000 per year, according to Anna.
“It all depends on location, views, and furnishings. JBR (Jumeirah Beach Residences) can net owners AED165,000, while one in Business Bay could generate AED125,000.
Since not every traveler can afford high prices, Frank Porter looked at areas next to the downtown like Business Bay, or areas close to JLT (Jumeirah Lake Towers) like JVC (Jumeirah Village Triangle), where short-term renting could be 20-30% lower in prices.
Tip 3: Choose the right management
Let’s start off with the fact that individuals will find it extremely difficult to manage their Airbnb homes.
Most of us don’t have the time or the desire to answer calls at 2:00 a.m. to fix a maintenance problem for a short-term tenant. While that is a nuisance, managers have to consider other factors such as tenants not living there for a year, but rather they rent apartments for only 2-3 days, followed by back to back check out and check in on the same day, and involving cleaning laundry, providing guests with anything from toilet paper to coffee, water, and continuous maintenance.
So if we put that idea to bed, management companies like Frank Porter also provide ease of licensing, as each Airbnb apartment needs to be licensed with the Department of Tourism and Commerce Marketing (DTCM.)
“We are a Dubai focused company armed with global experience. We really understand hospitality, and have the ability to turn homes into products that will compete with hotels in the market,” says Anna.
“The company assists in turning each property into a successful listing, complete with amenities, professional photography and description, styling (if applicable), daily adjustments of rates, friendly guest interactions, on-site availability, and cleaning and maintenance of the property.”
“We are completely focused on Dubai, so we also understand much more about the best areas to rent, the travelers, their needs, and we speak their language,” continues Anna.
“Property owners are our top priority, so if we feel that the guest is not a good fit, regardless of the safety deposit, we would forgo that income to safeguard the client relationship.”
For all of this, Frank Porter charges a 17% commission on the booking price.
Who is renting?
As the Airbnb market is quickly burgeoning in the UAE, Frank Porter recognizes different tenants/tourists for different seasons and reasons.
“Now you have Europeans and Russians escaping the cold, while in the summer, Airbnb businesses welcome more Gulf countries,” starts Anna.
“Nowadays, you have families, couples, friends, and business travelers, all looking to book Airbnb locations rather than hotels”.
Fact is you can never beat the price of an Airbnb. It’s always going to be cheaper.
“Let’s say you have one hotel room for AED500, you can have a short-term one bedroom apartment for AED400, which will include, on arrival, all the towels, coffee, tea, water, and shampoo you need, in addition to a living room, kitchen, balcony, multiple rooms, more space, and other things you won’t find at a hotel,” explains Anna.
The daily cleaning that hotels do provide is not part of the deal.
Frank Porter manages flats, studios, and villas and doesn’t discriminate on size.
“We want to be democratic in this business. We are not trying to sell for the 0.001 % of the population who are on the high end of the market,” says Anna.
“We cater to a range of clients, with accommodations at low rates to suit every guest’s needs.”
With Expo 2020 around the corner and expected to attract 25 million on its own, a record 15.79 million tourists visiting Dubai in 2017, to reach 20 million annually leading to the event, demand for short rental will skyrocket.
“In 2019, we will continue to grow the numbers of apartments we manage, while keeping our standard of service high,” says Anna.
“We are looking for new areas near the expo, and looking at taking whole residential blocks for the expo.”