property

How to make money from Airbnb in Dubai

Property owners say there’s money from short-term rents — but’s it not an easy buck

12:00 December 26, 2016
Airbnb
Mahvush Ali
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Own a home in Dubai and want to get 50 per cent more rent money — legally — with just a few strings attached?

Turning your property into a short-stay rental for tourists has long been possible through licensed agencies, who handle the marketing and grunt work — but take a hefty chunk in return.

However, since April last year, landlords have legally been able to cut out the middleman and list their property directly on home sharing giant Airbnb.

While Airbnb had been active in Dubai for years, it had long operated in a legal grey area. The new rules brought in by Dubai’s Department of Tourism and Commerce Marketing (DTCM) allow property owners to list their properties on the site.

Tenants also have the option to sublet their rented homes — but only if the landlord agrees.

Like most investments, strategy is needed for high returns, says a Pakistani businesswomen who set up her company, One Perfect Stay, after seeing the future in properties listed on Airbnb.

Fussy specs

Properties in posh districts popular with tourists, see the most notable returns of “30, 40 to even 50 per cent more” than yields from homes rented to residents on a standard, yearly basis.

Apartments or villas in Marina, Jumeirah Beach Residences, Downtown and the Palm are by far the most desirable.

Her firm employs 15 people who market, maintain and handle guests for a current stock of 10 homes listed on the site. She takes a 25 per cent cut of the profits. Most of the owners live abroad.

And there’s no profit without effort. The process of listing properties on the site can sometimes look like trading stocks and shares.

Tough platform

“Airbnb is very, very competitive … we have to be very vigilant on this platform,” says Ali, who begins every day with a routine similar to a Wall Street broker.

“We have to tweak the rates, not just daily, but two to three times per day.”

Still, there’s a growing market. An Airbnb spokeswoman said that the firm had “continued to see dynamic growth for Airbnb in Dubai — both in terms of the number of homes that have been put up on the site as well as in the number of guests staying in an Airbnb home when travelling to Dubai.” The spokeswoman declined to give figures of how many properties were listed on the site.

The DTCM, the Dubai body that regulates homes listed on Airbnb, did not return a request for comment for this article.

Despite the April rules giving power to landlords in Dubai, it is not clear whether it is legal to list property in the other six emirates on Airbnb. The rules also allow only a full home to be rented out. Failure to register your properties with the DTCM will leave you liable for a Dh5,000 fine.

Lots of work

“The workload in managing a single property by yourself is huge,” says Henry Marklew, a British development manager for Edwards and Towers, a UAE-based property broker.

There are also horror stories. “Obviously, you have a lot of customers that are hard work,” says Marklew diplomatically.

Ali, the holiday homes firm boss, says that guests from hell can be avoided with an “on-point vetting procedure” that involves plenty of instinct — and hard-earned experience.

Back in the early days, a guest from London left a luxury property with broken vases and stained sheets. The guest had booked a month’s stay, but left after just six days, according to Ali.

He left the property in a “disastrous form” to claim to Airbnb that the property had been rented out to him in its state of chaos.

“Of course, Airbnb is not on the ground, so they can’t say how I had given them the apartment,” Ali says. “That was a lesson learnt.”

Learning curve

As an local industry still in its teething stages, renting out property of Airbnb carries plenty more lessons for landlords hoping to make a quick buck.

Earlier this summer, an Airbnb guest booked several nights in palatial two-bedroom, 2,000 square foot apartment in the Palazzo Versace, next to Dubai’s creek.

The guest, a Emirati from Abu Dhabi who was on a visit to Dubai with his family, found the 2,000 square foot pad delightful, according to Chand Guria, the owner.

“He left a nice gift for me too, some chocolates,” says the Indian businessman.

But for Guria, the grateful guest’s generosity did little to sweeten the deal.

Despite the pad’s glittery baroque interiors, gilt-edged furniture and crockery, there simply aren’t many takers.

For starters, it’s too expensive, he says. At around Dh7 million, the massive cost of the property puts the per-night cost — around Dh4,000 — far out of reach for most tourists.

And then there’s the view — the apartment’s most eye-catching view is of the busy Al Khail highway, just 170 metres away.

“More tourists would want to be near Dubai mall, or the Marina, or the beach,” he says. “Demand is low.”

Where do I sign up?

How do I register my home with the DTCM so it’s fully legal to list on Airbnb?

*Follow this link to the DTCM’s online platform: https://hh.dtcm.gov.ae/holidayhomes/ and go through the steps given on the portal — there are quite a few. You’ll next have to visit the DTCM in Al Garhoud during business hours on working days. Don’t forget to bring a copy of your Emirates ID.

*You can then upload your property and relevant documents on the DTCM platform. If you’re a tenant, make sure to get a letter of no-objection from the landlord. You’ll also need to purchase insurance for your home. Bear in mind you have pay Dh1,520 to activate your account with the DTCM’s online platform. There’s also a Dh300 fee for each bedroom in your property, and a Dh70 management fee.

*As long as you haven’t skipped any steps, you’re good to go. When you’ve put the property up on Airbnb, just make sure to get passport copies of each guest and submit them to the DTCM. You will also need to pay a tax to the DTCM each month. Good luck!

(Tips courtesy of Ameer Jawad, the founder of Faraway Homes, a Dubai-based holiday homes firm)

Airbnb in numbers

*1,500,000: homes, rooms and spaces listed on Airbnb

*34,000: cities found on Airbnb

*191: countries where Airbnb operates

*5,000: dirhams you’ll have to pay to Dubai authorities if you break the rules