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IS HOLIDAY HOME RENTAL A TOP BUSINESS TO INVEST & SET UP IN DUBAI?
Published on October 22nd, 2022.
Holiday homes have become a big hit in the United Arab Emirates (UAE) market. The country is well-known to be one of the top touristic destinations around the globe with record-breaking, unique, and modern attractions facilitated by its’ state-of-the-art infrastructure. Dubai continues to attract tourists as a preferred holiday destination. In 2021, Dubai hosted over 7.28 million international visitors which was an increase of over 32% compared to the year before. Growth in the tourism sector is expected to grow in double digits year-on-year during this decade which in turn is pushing for a greater demand for hotel facilities.
Currently, there are 1,144 hotel establishments with over 194,000 rooms across the UAE. However, due to an expected increase in the number of tourists, the country will require a larger number of holiday home facilities. According to The National News UAE – in 2021, Abu Dhabi and Dubai ranked 3rd and 4th respectively in the list of top cities for holiday homes globally. In the UAE, real estate investors and house owners can earn up to 50 percent more by renting their villas and apartments through holiday homes as compared to traditional long-term rentals.
WHAT DO I NEED TO KNOW BEFORE STARTING A HOLIDAY HOME RENTAL BUSINESS IN DUBAI OR THE UAE?
A holiday home is a furnished accommodation rented on a short- or long-term basis to tourists, residents or citizens of the UAE without a tenancy contract (Ejari). These are different from hotel apartments, and instead they are private properties which tend to be less expensive. A prime example of a holiday home rental arrangement are the accommodations available on Airbnb. A property is owned by a company or by individual that contract with management companies to lease and manage the properties. The management companies may charge a fixed fee or a share in the revenue generated by the rent of the property.
Holiday homes licenses are issued by Dubai Economy and Tourism. To start a holiday home rental business in Dubai or the UAE, an applicant must meet licensing requirements to obtain a license. Like all commercial licenses, holiday homes operate as a regular licensed company in Dubai which can hire employees. A foreigner can 100% own a holiday home license and form a Limited Liability Company (LLC).
WHAT ARE THE RULES & REGULATIONS FOR STARTING A HOLIDAY HOMES RENTAL BUSINESS IN DUBAI OR THE UAE?
The UAE government has regulated the activities of holiday homes in the UAE. Companies managing properties as holiday homes must regulate with the Tourism Department of the Dubai Economy and Tourism. The regulator requires that all properties promoted or leased out as holiday homes to register within their system and have a real estate unit permit. Each holiday home unit needs to meet a set standard defined under the Holiday Home Rental Regulation Guide of 2020. All properties under management must well maintained by the operator. Partial rental of properties under a Holidays Home License are restricted.
The regulators have a categorisation for each holiday home license and permit holder and inspect the premises to issue a specific category to each property. To register each property there is a fee charged by the Dubai Economy and Tourism. Thereafter, the issuer updates the property documents to the designated portal. There is no requirement for renewal of the permit each year. However, there is a requirement of annually updating the renewed trade license and the relevant information to the authorities. The approval required for each property takes circa one business day to complete. For each rental, the holiday homes must collect the following fees:
- Tourism fee of AED 300 to AED 1,200 per year.
- Fee of AED 10 for a standard holiday home per booked room night.
- Fee of AED 15 for deluxe holiday homes per booked room night.
- Registration fee of AED 1,520 for the Department of Tourism and Commerce Marketing (DTCM) holiday home permit.
- 10% Municipality Fee on all bookings managed by the operator.
HOW TO START A HOLIDAY RENTAL HOME COMPANY IN DUBAI & THE UAE?
With Dubai and Abu Dhabi ranked in the top 5 list of cities for holiday homes globally, it is the right time to tap into this increasing sector.
Creation Business Consultants assist clients with obtaining the correct license and permits for holiday homes in the UAE. Let us manage the entire registration process including compliance, registration of properties and securing permits for the properties under management. Take the first step to set up your holiday home rental business by contacting our team for a free consultation at firstname.lastname@example.org or call +971 4 878 6240.