Pros and Cons of Short-Term Rentals in Dubai by Irina Alazova, Head of Mercury Group

Dubai is a city of contrasts, where skyscrapers reach for the stars and luxury coexists with a vibrant business environment.

It's no surprise that real estate here attracts investors from all over the world.

One popular way to monetize properties is through short-term rentals, offering daily or monthly rentals. However, like any investment, it has its undeniable advantages and equally significant drawbacks. Irina Alazova, Head of Mercury Group, shares more details.

The potential for high returns is perhaps the biggest advantage of short-term rentals. In popular areas like Dubai Marina, Business Bay, and Downtown, you can expect a yield of around 10% per year.

However, it’s important to note that this figure is an average and depends on numerous factors: season, location, property class and quality, and skillful pricing management.

Another advantage is the ability to respond flexibly to market fluctuations and adjust rental rates. During peak seasons, rates can be increased significantly, offsetting possible vacancies during less busy periods.

A further plus is the ease of ending the rental and moving into the property yourself. This flexibility makes short-term rentals appealing for those who plan to live in Dubai occasionally or prefer a flexible schedule for using their property.

Finally, apartments without long-term contracts are easier to resell, as not all buyers are willing to purchase properties with long-term tenants. Transitioning ownership to a new buyer becomes simpler and quicker.

Partnering with a licensed management company significantly simplifies all these processes. They handle everything from finding tenants to property maintenance, though, of course, for a specific fee.

Despite its appealing prospects, short-term rentals have some caveats.

First, there are utility costs: internet, water, electricity—all of which fall on you.

Second, vacancy periods are inevitable. Even in the most popular areas, there are "dead" seasons when apartments remain empty, bringing no income.

Third, don't forget the management company’s commission, which is typically 15-20% of total revenue.

Fully furnishing the apartment with furniture, appliances, dishes, and linens, much like a hotel, is another significant factor. Finally, wear and tear on the property happens much faster with short-term rentals than with long-term ones.

Short-term rentals in Dubai are a tool for those who are ready to take on risks and aim for maximum profit, even if it’s unpredictable.

This option suits investors willing to actively manage their property or delegate it to professionals, while accepting commissions and potential vacancies.

This type of rental is ideal for those who prefer not to be tied to long-term contracts and want to keep the option of using the apartment for personal stays. Before making a decision, carefully weigh the pros and cons, analyze the market, and choose a reliable management company.

Only a thorough approach, provided by Mercury Group brokers to all their clients, can turn short-term rentals into a stable and profitable income source.