Dubai has the opportunity to become an example of how cities can gain control of their currently unregulated rental markets while strengthening their tourism offerings.
Dubai’s tourist accommodation sector is set to get a welcome injection of property with a move to license holiday homes.
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued a decree to help develop the tourism industry by increasing the range of accommodation available to visitors — with the sector currently bursting at the seams. There are currently 100 per cent occupancy rates at hotels during the peak season.
The decree states Dubai’s Department of Tourism and Commerce Marketing (DTCM) will have the authority to grant licenses to those wishing to rent out furnished residential properties on a daily, weekly or monthly basis, according to the Dubai Media Office.
The DTCM will define the requisite standards required to receive a license; conduct inspections of properties; create a database of all holiday homes in the emirate; and ultimately accept or reject licence applications.
The system will result in holiday homes being classified as either ‘standard’ or ‘deluxe’.
DTCM Director-General Helal Saeed Almarri said regulating the rental of private properties as holiday homes would have a “considerable positive impact” on both tourism and real estate.
“In order to achieve the target of welcoming 20 million annual visitors to Dubai by 2020…the supply of visitor accommodation and broadening the range of accommodations available is a major part of this. We are working with the private sector to bring more five star hotels to the emirate and (have) announced a financial incentive for the development of new three and four star hotels (but) by including holiday homes as part of our Hotel Classification framework, we will ensure that visitors can book a private apartment, townhouse or villa with full confidence that the accommodation is of a quality standard, has the appropriate insurance, and is managed by a qualified party.”
He also said the decree would provide a potential revenue stream for owners with more than one property, giving them an alternative to renting out their properties on an annual lease.
Al Rais Holidays deputy managing director Mohammed Al Rais said the new step would help clean up the current black market in holiday home rental.
“I have heard of people who are doing it through personal friends but not advertising as it’s not licensed…there is nothing official…tomorrow if any problem is there…DTCM are aware…there is something I can do legally, but today nothing legally can be done.”
He said the step would give tourists more choice, though he doubted it would have any impact on the price of accommodation as Dubai tourist numbers were projected to increase from 10 million last year to 20 million in 2020.
“When we talk about hotel rooms, there is an acute shortage. We have about 90,000 rooms but the people coming in are much more than this.
“To have all these guests we need to have room for them.”
Al Rais said even during summer occupancy levels were between 65 and 70 per cent “which is very high for the off-season”.
“Now the season is coming, winter, New Year and Christmas, Dubai’s fully 100 per cent occupied, every year it’s like that…if you want to find accommodation for the 28th or 29th (of December) in Dubai you can’t find, you have to move to Sharjah or neighbouing emirates.”
While there were 100 more hotels scheduled to be built over the coming five years, this was still not enough to keep up with the demand especially now the city had won the Dubai Expo 2020 bid — which Al Rais predicted would lead to an influx of tourists even prior to the event.
Al Rais said while he was not an expert in property, he did not expect the move would shoot real estate prices up as new developments were coming on line all the time.
“Still supply is adding and adding.”
(c)2013 the Khaleej Times (Dubai, United Arab Emirates). Distributed by MCT Information Services.
Have a confidential tip for Skift? Get in touch
Photo credit: A view of the beach in Dubai from a balcony in The Palm Atlantis. Sarah Ackerman / Flickr