Global عربي
KSA عربي
Global عربي
Dubai’s real estate market is booming. With record home sales, prices have surged 70% since 2019. If you’re an investor looking to enter the market, you’ll want to decide whether to manage a long-term rental or a more active holiday home. In this post we break down how each type works in the context of Dubai and the benefits of each.
Read more about: Renting vs. Subletting in Dubai
Holiday homes in Dubai make up the growing segment of real estate that is rented out for short-term stays, whether for business trips or vacations.
Travellers often prefer these homes because, unlike hotels, they typically come fully equipped and offer a spacious and comfortable home-like stay – full kitchen appliances and washing machines, if not gardens and jacuzzis are often among the perks.
In Dubai these properties have a specific legal definition (per Decree No. 41 of 2013), which states that holiday homes are “furnished real property units leased out by a license holder regularly and on an ongoing basis for the purpose of further subletting them to guests.” Beyond that, there’s a few specific rules, regulations, and details that you’ll want to know before jumping in. The key points are as follows:
- Licensing Requirements - To get started as an investor, you’re going to need what’s known as a Holiday Home Permit, which is a license issued by the Dubai Department of Economy and Tourism (DET, formerly DTCM).
The permit lets owners offer their properties for short-term rental and manage their bookings through a system run by DET. You can apply and see information on fees here.
There are two types of license holders. Namely:
1- Individual owners - You can operate up to 8 holiday homes under an individual license. Anything beyond eight, the owner must register as a professional operator and obtain a trade license.
2- Companies - To work as a corporate operator and rent out more than eight properties, you’ll need to also register as a company and show a valid trade license when applying for the Holiday Home Permit.
You may also need to obtain a certification from the Real Estate Regulatory Agency (RERA) to manage properties.
- A title deed or sales agreement including a payment completion certificate to demonstrate ownership
- A signed copy of the landlord’s passport or Emirates ID.
- Trade license (if the property is owned by a company).
- A property management letter, also known as No Objection Certificate (NOC), from the property management company to show they are aware that the property is being used as a holiday home for rental.
- A copy of a current Dubai Electricity and Water Authority (DEWA) bill to demonstrate that utilities are registered and active.
PRO TIP: If you're a property owner with investments of over AED 2 million, you will be eligible for a UAE Golden Visa, which grants long-term residency.
Read more: UAE Golden Visa - Frequently Asked Questions
Holiday homes break down into two types: standard holiday homes with more basic amenities, and deluxe holiday homes.
The higher ‘deluxe’ classification entails higher fees paid to the tourism authority and a higher required standard for furnishings. Keep in mind that licenses must be renewed annually and properties must undergo a yearly inspection to ensure standards are being kept.
There’s several fees involved with registering and maintaining your property:
1- Initial costs
- AED 1520 registration fee to process your application
- AED 320 for property inspection
2- Yearly renewal costs depend on your property. In 2025, the breakdown is:
- Studio or 1-bedroom - AED 370
- 2-bedroom - AED 670
- 3-bedroom - AED 970
- 4-bedroom or more - AED 1,270
For each night a guest stays, you pay a tourism fee:
- Standard holiday home - AED 10 per night
- Deluxe holiday home - AED 15 per night
3- Municipality Fee
- You must also collect 10% of all booking revenues and send this to Dubai authorities monthly.
Platform Fees/Commissions:
- This can range from 6-15% charged by platforms like Airbnb, Booking.com or others who you utilize to market and book your rentals.
Occupancy rates appear to be on the rise even despite a growing number of listings.
- Individual rates can vary by property type and time of year. According to AirROI, which analyzes - short-term rental markets, in 2025 typical Dubai properties had an occupancy rate of about 48%. - Properties in the top 25% were able to maintain 74% occupancy rates or higher.
1- Dubai Marina - Notable for its waterside promenade, sandy beaches and chic markets.
2- Downtown - Popular with tourists and business travelers because of its iconic attractions like the Bur Khalifa and Dubai Mall.
3- Palm Jumeirah - Famous for its palm-shaped island dotted with posh apartments.
4- Jumeirah Beach Residence (JBR) - Upscale residential towers and luxury retail options make this another popular waterfront destination.
If you don’t want to deal with the constant management of a holiday rental, a long-term rental is a good alternative. This typically means a lease involving one year or more, offering stability for the renter and the landlord. Here’s what you should know:
- Definition and Tenancy Laws (RERA Regulations) - Dubai’s long-term rental market is regulated by the Real Estate Regulatory Agency (RERA) and the Dubai Tenancy Law (No. 26 of 2007). Key points include that contracts must be in writing and cover details like the rent, lease duration, and tenant versus landlord responsibilities.
Properties must be registered on Ejari, an online system that provides legal recognition of tenancy contracts.
- Rental increases - It’s important to note that In Dubai, rent increases are capped. The amount you can increase the rent at the end of a contract period depends on how far below market prices the rent currently falls. This ranges from no increase permitted if the property falls within 10% of market rates, to a maximum of 20% hike if it’s more than 40% below market rates.
- Typical Lease Periods - As noted, one-year contracts are the most common. These can be automatically renewed if tenants stay with the flat.
- Payment Terms - The most common payment method is post-dated cheques. Some landlords offer quarterly or monthly arrangements to make it easier on the renter, but typically more cheques means a higher rental price. Security deposits are usually 5% of annual rent for unfurnished properties, or 10% for furnished, refunded at the end of the contract term.
- Popular Areas for Long-Term Rentals - When it comes to long-term rentals, there’s a huge variety of popular areas, depending on what price range the rental falls within. To name a few:
- Premium areas - Dubai Marina, Downtown, Business Bay
- Family-friendly suburbs - JVC, Al Furjan, Mirdif
- Luxury suburbs - Arabian Ranches, Dubai Hills
Read more about: Renting vs. Buying in the UAE: What's Best for Expats in 2026?
Now that we’ve outlined both types of rentals, the question remains: which is a better investment financially? Here we’ll compare the two types of rentals in key categories.
Rental yield is the annual rental income you’ll make as a percentage of the property’s purchase price. A higher yield means a better investment. Dubai is often cited as a market that offers some of the highest rental yields in the world.
- Long-term rental yields - In Dubai, the average yield for long-term rentals is currently over 6 percent, but this varies based on neighborhood and type of property. You can see a breakdown here.
- Holiday home yields - Tracking exact yields on holiday homes is trickier. But typically you’d expect a higher yield. You’re charging premium rates for convenience and short-term stays, compensating you for the more active management involved.
According to BnBme, short-term rentals in Dubai can generate 30-50% more income versus long-term leases, depending on location, property type and occupancy rates. You also have the ability to charge higher prices during major events, when the city is at capacity with guests flying in.
- Long-term rentals - if you’re looking for a stable revenue stream, long-term rentals are a more secure choice. Tenants are locked in for 12-month leases and you likely don’t have to spend much time searching for new ones.
- Holiday Homes - Peak tourist seasons can bring a windfall of extra money, but this comes with the potential downside of income volatility during slow periods. To avoid this, you’ll likely have to take a more active management approach that includes regular marketing to keep occupancy rates up.
- Long-term rental - These are typically less costly to manage. That’s because maintenance is less often, and tenants cover the cost of utilities, reducing your expenses.
- Holiday homes - These are more costly to manage. You’ll have to deal not only with utilities but also regular cleaning, constant maintenance, marketing, and a system for coordinating the influx of guests.
One of the great perks of Dubai is that there is no personal income tax on rental earnings. There are other fees to consider however.
- Long-term rentals - landlords must pay a Dubai Municipality housing fee, which is typically 5% of the annual rent, collected from the tenant. If you use a property management company, you will have to pay their fees as well.
- Holiday rentals - the fees you’ll pay for the rentals are much more extensive (the details are listed above in the first section of the article).
There’s a lot of benefits and drawbacks of each type, so it really depends on your preferences. To put this in perspective:
- Higher potential yields, ability to earn more during peak periods
- Flexibility - you can utilize the property for yourself or rent it out
- Adjust prices in real-time as the market’s dynamics change
- Higher ongoing costs because of upkeep and maintenance
- Income instability
- More time needed to focus on management
- Property likely to experience more wear and tear
- Stable and predictable income stream
- Very low marketing costs
- Landlord protections offered by RERA tenancy laws
- Low turnover of tenants mean much less management required
- Potentially lower rental yield compared to high occupancy holiday home
- Personal use limited
- Rent increases are capped by regulations
- Long potential vacancy period if tenant leaves
Disclamer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
