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Dubai’s Short-Term Rental Push Creates ‘Race to The Bottom’


Women on stage at a conference

Skift Take

Dubai's ever-growing tourism sector makes STRs look like easy money, but operators warn this is far from true.
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A push by the Dubai government to introduce more short-term rentals into the market may have worked a little too well. That was the sentiment at the Skift Global Forum East 2024 in Dubai, where execs warned the emirate is being flooded with new companies unfamiliar with the sector.

“We’ve seen a lot of new entrants, everybody has been doing a holiday home company [in Dubai] over the past two years,” said Nina Klishevich, general manager for Blueground in Dubai.

Based in New York, Blueground is a property-management company that operates furnished 30-plus-day rentals.

In 2022, Dubai Tourism partnered with Airbnb to promote the emirate as a remote working hub and formalized the city’s STR sector. Initiatives such as cutting down the time it took to secure a license to run a short-term rental brought in a wave of new companies.

New Players Are ‘Sabotaging’ Themselves

Mahwussh Alam, group CEO of One Perfect Group, which operates the One Perfect Stay property management firm, said these new players are “sabotaging” themselves.

“The splurge of holiday home companies and everybody jumping on the bandwagon, probably that is sabotaging the industry itself, but there’s no external threat per se,” Alam said.

She added that many of these new operators enter the market with a real estate background, with little hospitality experience.

“If you want to do a short-term rental, we call it alternate hospitality for a reason,” Alam said. “You have to approach it from a hospitality point of view. As you scale, things shift to the other side, more transactional. You have to keep the quality in check. This business is based on relationships with the landlord and the guest.”

Low Fees

The influx of these operators also has landlords expecting unrealistically low fees, Alam said.

“Three months free, no management fee. I don’t know how the maths works there,” said Alam. “We are managing hundreds of properties. Dubai has been at an all-time annual rental high for the last two years. My peers are going on socials and saying you can make 30% more [from STRs] than traditional annuals models, and landlords jump on the same bandwagon and ask us to make them that amount of money. That cycle continues, and it’s based on nothing but claims. That’s where things break down.” 

Klishevich added: “When you have a lot of competition coming into the market in its growth stage, you have unrealistic expectations from the landlord. We are working right now with developers on onboarding entire buildings. It’s very different working with a corporate landlord than someone who has put half their life savings into one property.”

“There is a race to the bottom, for sure. More and more landlords are asking for free management.”

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