Latest / Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights / Maximising Revenue in Dubai's Short-Term Rentals: Strategies for Success
Transcript
- 0:00So you need to know the culture of Dubai.
- 0:01I think it's an amazing market to invest higher returns than in
- 0:05Europe, and it's a normal market.
- 0:06Now 90% of departments can be regulated.
- 0:10It takes three days, 100 dollars, $500 a year per
- 0:14license. How easy is it to launch a short
- 0:17term rental business in Dubai? What is regulation like in the
- 0:21UAE and what kind of guest experience do you need to
- 0:25deliver? Our guest today on the Host
- 0:27Planet podcast is Oriole Planner.
- 0:29He's been based in the the Emirates for almost a decade and
- 0:31has clear advice for anyone keen to invest in the Middle East.
- 0:41Oriel, thank you for joining us on the Host Planner podcast.
- 0:44What would your advice be to people who were keen to invest
- 0:48in short term rentals in Dubai? OK, so thanks for having me.
- 0:54The first advice would be get good advice, professional
- 0:59advice, do your numbers, but do it.
- 1:01I think it's an amazing market to invest higher returns than in
- 1:06Europe based on the markets we operate in and it's a normal
- 1:09market. Now some people might be scared
- 1:12or afraid about Dubai the unknown, but it's a mature
- 1:15market with a lot of demand on huge market.
- 1:18What are the main differences now between Dubai and Europe,
- 1:22for example? So I mean several from a
- 1:26industry perspective is about the regulations.
- 1:29In my opinion, the main, the main difference.
- 1:31So here every apartment like let's say 90% of the apartments
- 1:35can be regulated. It takes three days, $100 to
- 1:39$500 a year per license. And then you just need to
- 1:44register a guest like you do it in Europe and you can operate
- 1:47legally. There is no limit.
- 1:49And that is the main exchange and I think that drives the
- 1:52whole market in terms of supply, in terms of demand, in terms of
- 1:56prices, in terms of type of companies, in terms of growth.
- 1:58We have had 10X growth in the last five years accelerated post
- 2:04COVID. So the regulations as I mean the
- 2:07same it happens in Europe, it's driving the it's the dynamic of
- 2:10the market. So everything is a is a is a
- 2:14consequence of this fairly easy relation.
- 2:18OK, real talk now for all you hosts out there, you know that
- 2:21moment when you guest messages you again with hey, what's the
- 2:25Wi-Fi code? Or you're staring at 5 different
- 2:28calendars wondering if you've accidentally double booked the
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- 3:36What are the main pros and cons if someone's coming over from
- 3:40Europe or even America and they're interested in getting
- 3:43involved in the Dubai scene, what are the what are the pros
- 3:47and cons of of getting involved? So first of all, again is mainly
- 3:51the market is a, is a quite different market.
- 3:53In the end, Europe is different languages.
- 3:56So you can, you can argue that each market is very difficult a
- 3:59different, sorry. Our industry is very local at
- 4:02the same time. So you need to know the culture
- 4:04of the Y. It's a culture built from
- 4:08obviously the locals and the Arab country, Australian
- 4:12commerce, relationship, personal relations.
- 4:14It's not like Northern European. It's more Mediterranean from
- 4:17where I come from. But also it's a mix of different
- 4:22cultures. 80% of the population is from abroad.
- 4:25So you add on top Indian culture, Asian culture, European
- 4:32culture, African culture for every country because every
- 4:37continent has several countries. So you have maybe 15 ways of
- 4:41doing business. So you need to be very flexible,
- 4:43very adaptive and know the the different ways of doing business
- 4:46of each culture. And that's, that's the learning.
- 4:49It's not something black and play something coming saying,
- 4:51oh, I know how it how it is to run 20 years in London or in
- 4:55Barcelona or in New York. You know, I think you need to
- 4:58know the culture very well. Talk to us about the the numbers
- 5:02then what are the returns like in Dubai?
- 5:06And obviously you have the advantage there of of no
- 5:09personal taxation. So if you're based there as
- 5:10well, you can you can take more of your profits.
- 5:14Correct. So here we don't have gross of
- 5:16net profits like all profits that are net to pocket.
- 5:20So we we are talking about based on the price of the asset.
- 5:24So the return of investment of an asset would be between 7 to
- 5:2710%. This is changing is is going
- 5:31down a little bit because it's getting closer to mature markets
- 5:35since we were removed from the OCOECD list of fiscal heavens.
- 5:42So now more money is coming in, more institutional investors are
- 5:46coming in and therefore the profits are are the ROI is
- 5:50getting closer to other markets. But the still if you do like not
- 5:55the best performing assets, you are talking about the five, 6%.
- 5:59If you manage it very well and you did a good deal, you can go
- 6:02closer to 10% annual return of of the asset.
- 6:06Also it's a very, very liquid and and, and and volatile market
- 6:11in terms of the prices. So we have growth of 20% of the
- 6:15price of the asset. So if you do a good investment,
- 6:17you can have a double profit, right?
- 6:19The LOI from a cash perspective, but also the appreciation of the
- 6:22asset. What are owner expectations like
- 6:26in Dubai? Yeah.
- 6:28So the the same that we were talking about the cultures, the
- 6:31culture of the host. So each host is like different,
- 6:34different type of expectations. We have a lot of people from
- 6:37abroad that invest here and therefore they just want trust,
- 6:41transparency, reliability. So someone that is just paying
- 6:45on time, being transparent, honest because they cannot do
- 6:49anything from Sweden or from Germany, right in Dubai, this
- 6:54honestly is the best the best host because someone educated
- 6:56that trust you and just want some cash every month.
- 7:00Then you have someone that invested here.
- 7:02The savings is in Dubai and is very hands, hands on and after
- 7:08you and everything is a bit more complicated, but you need to
- 7:10deal with it. And yeah, and then the other one
- 7:15that wants 15% year on year, right and, and and unrealistic
- 7:19that maybe the flashy marketing campaigns of other companies are
- 7:23telling you can get 15%, which is not true and then they go
- 7:26after this 15%. So yeah, there is a bit of
- 7:28education on the market to be done.
- 7:31It's a new market we are talking about seven years after the
- 7:34first regulation. So everyone need to work the
- 7:38companies and also the first. What kind of properties perform
- 7:43best in Dubai and and the wider UAE?
- 7:46Of course we're talking about Dubai because that's what people
- 7:49kind of recognize, but there's a lot more to the UAE than just to
- 7:52buy. But what kind of properties
- 7:54really work well out there? And that's the magic question.
- 7:58So Dubai is a city of now maybe 6 million people as double.
- 8:05So we have the premium areas. Premium areas today have a lot
- 8:09of competition and probably the return of the investment in
- 8:12terms of cash. It's lower than other areas
- 8:15where you can have more cash flow.
- 8:17But then with the the asset depreciation element, it's
- 8:20probably has more impact, right, if you buy premium.
- 8:23So if you, if your strategy is a 510 year exit plan, maybe go to
- 8:27premium areas where you can have a more asset depreciation
- 8:30strategy rather than cash. If you are looking at cash, then
- 8:34go to secondary areas where you'll you'll have more cash,
- 8:38but then the asset depreciation it's more risky because you
- 8:41never know if there is a bit of a downturn.
- 8:43Always the premium areas are going to be more resilient.
- 8:48So it depends on your strategy. And also Abu Dhabi, Rasal Haima,
- 8:53since you asked about the whole UAE are two cities that are
- 8:56coming up with the casino in Rasal Haima, Abu Dhabi.
- 9:00Now they they just released the the news that Disney is going to
- 9:05open a theme park in Abu Dhabi in the next in 20-30.
- 9:09So many things going on that too many options.
- 9:12So you need to have a good plan to invest.
- 9:16What are guest expectations like in Dubai and what does the
- 9:19normal traveller look like? Is it people coming on holiday?
- 9:21Is it business? I imagine it's a big mix of of
- 9:24people. Yeah.
- 9:25So there are three types I would say.
- 9:27So there is the the tourist that comes here one week maybe one's
- 9:31beach side, as I said, good, good property next to the beach,
- 9:35go across to the beach. There are plenty of properties
- 9:39now being built with even private beach.
- 9:41So we have a good, good supply of properties for that.
- 9:45Or you have urban also attendance season if it's
- 9:47summer, which is very hot in Dubai.
- 9:48I mean we, we cross the 50°C in summer or in winter and then
- 9:53it's the typical tourist that you will see in any city.
- 9:57Then you have the business traveller also it's more in high
- 10:00season in winter because the big conferences happen in the good
- 10:03weather and, and these ones are closed more, more to the
- 10:06conference. Yeah.
- 10:10The FC, which is the financial area different and they stay
- 10:13maybe 2 weeks. And now we have this digital
- 10:17nomad or people who want to come to Dubai and they want to test
- 10:20areas, they want to test properties or they need three
- 10:23months to find a job and then they stay like this maybe
- 10:26between two months to four months.
- 10:29And they chose maybe the secondary areas and with a
- 10:33premium, that's where why this properties perform very well in
- 10:36this area. So, so you have these three,
- 10:38these three segments and then sorry and then nationalities,
- 10:43they come from Saudi, they come from Europe, they come from
- 10:46India, Pakistan, Chinese are starting to come after COVID.
- 10:51So all these three segments, it's depends on the nationality.
- 10:55The expectations are completed. And how do you go about
- 10:59delivering that great guest experience in the UAE?
- 11:02Is it a little bit different to other parts of the world, would
- 11:05you say? I mean, the hospitality is big
- 11:09smile, good service and and doing to others what you would
- 11:13expect for yourself, right? I think that's a rule that it's
- 11:16good to everybody in the world. But here from a operational
- 11:20perspective, maybe it's a bit different because anyone living
- 11:23in Dubai needs a visa and to get a visa a job, right?
- 11:27So I don't know. I remember in Barcelona, where
- 11:30I'm from, I used to have these students that can work for four
- 11:33hours and that was very useful for check insurance or night
- 11:37check insurance or, or interns or people working for a couple
- 11:41of months. Here you don't have this, no.
- 11:43So any team member that you have needs to have a contract, needs
- 11:48to have a visa, which is a bit expensive.
- 11:50So you need to have a proper plan and you need to have a
- 11:53trained people and, and imagine multiplying by 5:00, not only
- 11:59halls, but hotels. The demand for hospitality
- 12:03people has not about plenty. So, so, so we're struggling to
- 12:08to find talent. So we try to get it in in house.
- 12:12Everyone manage everything in house.
- 12:14We don't source many things, not even cleaning, not even
- 12:16maintenance. And therefore the training, it's
- 12:19important and, and we put a lot of effort in training.
- 12:23In terms of the hotel scene in in the UAE, we know there's like
- 12:25a lot of luxury hotels, are short term rentals in the
- 12:29country seen as a cheaper option to hotels most of the time?
- 12:35Yes, there are hotels that are very expensive.
- 12:38You're seeing like crazy. But again, based on the fact
- 12:42that you can have a license anywhere and almost all the
- 12:45apartments you have very good locations of holiday homes as
- 12:48well. You have penthouse of duplex
- 12:51penthouse in front of Burj Khalifa.
- 12:54I don't know any hotel that can have that.
- 12:56So maybe in the top, top, top premium holiday homes do compete
- 13:00with hotels or villa in the pond with six bedrooms and private
- 13:04beach and pool. Yeah, you can have a hotel, but
- 13:08you don't have the privacy of a villa.
- 13:11So I think the top premium you can, yeah, you, you do compete
- 13:14with hotels in the price point and then in the in the mid
- 13:19range. No, then hotels you you are a
- 13:22bit more budget, but that is when it comes to place the the,
- 13:25the the the type of guest. If it's a family, for example,
- 13:28but that's everywhere in the world.
- 13:30You have a three bedroom apartment, you can compete with
- 13:33the three hotel bedrooms. So price room room is not that
- 13:38different. But when it comes high season
- 13:42hotel starts together group and see definitely Hollywood homes
- 13:45is a much more budget option. Let's talk about setting up
- 13:50then. So if somebody from Europe or
- 13:54the US wants to go to Dubai and set up a business there, maybe a
- 13:56property management company, what's the process and and how
- 14:00simple is it? So from an admin and corporate
- 14:04perspective is extremely simple. You, you come here, you can open
- 14:07a free zone company, which is a company that you can open maybe
- 14:13in one or two weeks you pay 4005 thousand dollars and you get the
- 14:19company. Then to get the holiday homes
- 14:21company, which is the operational company, it's a bit
- 14:23different. You need, I need mine seven
- 14:27years ago, but probably one month, one month and a half.
- 14:31But the company can handle this for you is very straightforward.
- 14:34And, and it's not even that much more actually.
- 14:38Then you have now a bit more requirement because even though
- 14:41we don't have taxes, personal taxes now they are corporate
- 14:44taxes that is VAT. So there is a bit of compliance
- 14:47now in terms of Audi and bookkeeping that's increasing a
- 14:50little bit the admin cost rather before everyone was working in
- 14:54excels and notebooks. So, but but it's fairly simple
- 15:00the market understanding the market as I said before is is
- 15:03another story. Yeah, simple to set up, but
- 15:06you've got to got to do your your research and you've
- 15:09mentioned it a couple of times the the regulation, but just
- 15:12outlined to us exactly what the regulation is in the UAE in
- 15:17relation to SDR. So as I said, you have you need
- 15:21a company regulated as a short term rental operator.
- 15:26It's a chapter in the in the names of the companies and you
- 15:29are licensed by the Dubai Economic Department and by the
- 15:33Dubai and economic and Tourism Department.
- 15:35So you have to regulate to licenses that allows you to have
- 15:41units under your license. So then if you go to a landlord
- 15:45or you buy a property and you get the license for that unit,
- 15:50you just apply online and you couple of days you get the
- 15:54license attached always to a company.
- 15:57So it has the apartment number and the company number or
- 16:00license you pay if it's a small $100, if it's a bigger, I think
- 16:05it's $100 per room per year. And that's it.
- 16:09Your license and you can operate.
- 16:10You need to publish your quote code in the door.
- 16:13You need to have some some requirements in terms of things
- 16:18that have department post, you know, huge list of things and
- 16:24that's it. And then pay the tourism dirham,
- 16:26which is also around $3 per night per person for everyone.
- 16:34So any property that wants to operate as a short term rental
- 16:37just has to pay the license fee and and they're good to go
- 16:39basically. Yeah, there is an exception.
- 16:41What is you cannot do this if the building is a hotel as well.
- 16:46So if that building is a hotel and then they have some
- 16:48apartments you cannot do and in the Burj Khalifa is not allowed.
- 16:55Keeping the Burj Khalifa exclusive.
- 16:57Burj Khalifa, obviously been there, the tallest building in
- 16:59the world. I've been there a couple of
- 17:01times. That is absolutely incredible.
- 17:04How do you see the UA ES short term rental market evolving over
- 17:08the next five years? Yeah.
- 17:10So Dubai is growing. I just heard this morning that
- 17:16even we grow 20% the number of licenses.
- 17:21Some people experienced in more mature markets are saying that
- 17:25eventually the city will limit the number of of licenses.
- 17:30I know why in in very, very oversupplied areas as I said
- 17:34before are not that good as we were before.
- 17:38And probably there is a pressure in rental prices that's
- 17:40happening in Europe. So there might be a limit in
- 17:45number of prices. We're talking with some
- 17:47investors. So probably now it's time to try
- 17:49to get in and get the license so that when they limit you are you
- 17:54are in. So Dubai stable market, I mean
- 17:57worldwide capital city in terms of tourism.
- 18:00So demand is is there and it will go and continue to be
- 18:03there. And then you have Abu Dhabi and
- 18:04Ras Al Haima with huge mega projects 2030, we have the
- 18:10casino and Ras Al Haima, we have Disney and Abu Dhabi.
- 18:12Abu Dhabi has Lubra, has Guggenheim, different strategy,
- 18:16more family oriented. Ras Al Haim are probably super
- 18:20leisure oriented. They are one hour from Dubai,
- 18:24both of them by car. So it's almost the same
- 18:27destination. So that will either increase the
- 18:30number of days from Dubai or create different destinations
- 18:34themselves. So I think the market as UAE,
- 18:37which is small country will grow definitely, definitely.
- 18:41And then the impact of World Cup in Saudi, Expo in Saudi, that
- 18:47this is unknown. It can reduce the number of
- 18:50Saudi travellers coming to Dubai or can increase the number of
- 18:53travelers to Dubai if they combine the two destinations.
- 18:58Exciting times, yeah. And what's, what is your your
- 19:01view really of the other countries in the Gulf as well?
- 19:03You mentioned Saudi there. Obviously they've got the World
- 19:05Cup coming in in 2034. How are things are developing
- 19:08across the region? Yeah.
- 19:11So Saudi is the largest country in the region and in terms of
- 19:15population and GDP, they recently opened sit the content
- 19:20to tourism. It was not allowed two years ago
- 19:24and it's an unknown. It has a lot of potential. 2034
- 19:29is 9 years under. I mean, companies are younger
- 19:33than nine years. So we don't know what's going to
- 19:35happen in nine years. It's difficult to plan for nine
- 19:38years. So it's difficult to make the
- 19:40investment decisions for your company for 9 years from now.
- 19:44But what is a fact is that Riyadh, for example, the capital
- 19:46city of Saudi is, is growing. We saw the numbers last week
- 19:51here. We had the scale event about
- 19:52Riyadh and they have 90% occupancy rate, hockey stick
- 19:58growth, bad regulations are also changing.
- 20:02So it's a bit of an unknown. I know two or three very good
- 20:06companies are starting to operate in Riyadh and they are
- 20:08successful, but they're struggling.
- 20:10So I think it's a bet, it's a long term bet.
- 20:12I'm sure if you want to do the bet, I think it's a bet they
- 20:14will pay, pay off. But but the the question is when
- 20:17and at what cost, right? Makes sense.
- 20:22Just before we get to the questions finished, then tell us
- 20:24about your brands that you run. You've got high guests and Mr.
- 20:28Alfred, tell us the story of those platforms.
- 20:31Yeah. So High Guest is a operator,
- 20:33holy homes operator that we've created seven years ago in
- 20:37Dubai. Then we expanded to Barcelona,
- 20:40we expanded to Mumbai and India. We did some tests in Australia
- 20:44as well. During COVID, we, we, we closed
- 20:49in the operation and we focused in Barcelona and Dubai.
- 20:53And then again also during COVID, we carve out the
- 20:57software, the PMS and we rebranded it under Mr. Alfred
- 21:01and we are offering PMS and revenue management services. 90%
- 21:06of our clients are in Dubai, which we have.
- 21:10It's a good market for us. We're quite strong here and
- 21:14planning to be stronger. Excellent.
- 21:17So is it, is it APMS that you've developed which works really
- 21:20well for for the UAE? Yeah, I think so.
- 21:23There's Apms. Fantastic.
- 21:26We'll put some links to those brands in the show notes.
- 21:29OK, then, Oreal, we've got a few questions to finish.
- 21:32What's your favorite brand in the STR space and why?
- 21:38So there is a brand that I like a lot for what they did and, and
- 21:42how they've done it, which is price Labs.
- 21:44I like price labs. I remember, I don't know, I
- 21:49don't know the years now, seven years ago, starting to test
- 21:52price labs because I'm a freak of management data and
- 21:55everything. And I and I love what they've
- 21:57done and I love how they've done it because a lot of brands are
- 22:00all marketing and putting money and money and money.
- 22:05I know they fundraised, but they fundraised when they have
- 22:08already had a good product, good brand, recognised brand.
- 22:12They were their living value. So, so I, I like, it's like a
- 22:15geek company, which is like me but successfully globally.
- 22:20So I like it. Great shouts out there for Price
- 22:23Labs. An individual in the STR space
- 22:26you'd like to give a shout out to and why?
- 22:29That's very difficult because then so many people that you
- 22:32forget. But I, I like a lot the team of
- 22:36scale. I like Don Paolo and Damien.
- 22:39I mean, as you know, I'm, I'm partner of them here in the
- 22:44Middle East and I like the way they, they build the brand.
- 22:50Everyone likes them the way that they, they are very genuine,
- 22:55similar to the price of the story, right?
- 22:56That is a real and genuine people and company and I like
- 23:00that. Great shout out there for Damian
- 23:04and Gian Paolo and yeah, the brilliant Scale team.
- 23:07Finally, then, your top tip to anyone interested in buying a
- 23:11rental in Dubai. So for me is get a good research
- 23:17and don't don't focus everything on this Instagram flashy
- 23:23marketing headlines. I don't like it and and they're
- 23:27not true. Dubai has a lot of areas it's 10
- 23:32cities in one. So do your research, ask someone
- 23:36that knows know who to ask. Also get 5-6 sources and the
- 23:43device is very open in data. The government provides data of
- 23:47transactions and rental and and selling.
- 23:50So it's but you know your how much your neighbor bought the,
- 23:55the, the, the apartment for and how much they pay rent.
- 23:58So, so you can do so much research of actual data, but go
- 24:03to the source. Don't don't get into the flashy
- 24:07Instagram data figures. Yeah, don't believe that
- 24:11influences go, go straight to the source.
- 24:13I think. I think that makes a lot of
- 24:15sense. Oriole, it's been a real
- 24:17pleasure chatting to you on the House Planet podcast.
- 24:19Thank you for joining us. Thanks for having me, it's been
- 24:22a pleasure. Great to chat to Oriole Planner
- 24:24there from high guests and Mr. Alfred if you're interested in
- 24:27setting up in the UAE or anywhere else for that matter,
- 24:30Do your research. If you're looking for more free
- 24:33education, head to House Planet dot Club, the fastest growing
- 24:37multimedia platform in the short term rentals industry.
- 24:40We're proud to help hosts and property managers supercharge
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- 24:52Until next time, happy hosting.