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RESEARCH
DUBAI
HOLIDAY HOMES MARKET REVIEW 2019
AN ANALYSIS ON THE IMPACT OF HOLIDAY HOMES ON DUBAI’S HOSPITALITY MARKET
RESEARCH
DUBAI HOLIDAY HOMES
MARKET REVIEW 2019
Almost five years have passed since the introduction of Decree Number
Key findings 41 (2013) which regulated the leasing of vacation homes in the Emirate
In Dubai’s holiday home market there of Dubai. The Decree aimed to provide a framework within which the
are currently 10,766 active* listings out short-term rental sector could operate and was one that was beneficial
of a total of 20,395 properties which to both operators and to end users. Easing of regulations in April 2016
have been registered on the Airbnb
platform. opened the market further to individual operators, which allowed
homeowners to rent residential homes on a short term, straightforward
Dubai’s holiday home market accounts and low cost basis.
for 2.0% of Dubai’s total households,
the highest proportion of all other key Whilst there are many platforms for short Holiday home supply
global hub cities. term rentals, Airbnb is viewed by many
as an instrumental enabler of the peer-to- In Dubai’s holiday home market there are
peer short term letting boom particularly in currently 10,766 active* listings out of
Of the 10,766 active listings in 2018,
major tourism hubs such as Paris, London a total of 20,395 properties which have
61% were entire homes or apartments,
and New York, to name a few. been registered on the Airbnb platform
31% were private rooms and the
since 2010 (Figure 1). The total number
remaining 8% were shared rooms. In Knight Frank’s 2016 Holiday Homes of listings has increased substantially
report we noted that the market size of in recent years, with total active listings
From late 2017 we have seen a peer-to-peer short term rentals in Dubai recording a growth rate of 161% since
divergence in achievable RevPAR in the was fairly limited, and had considerable 2016.
holiday homes and hotel market. ground to cover in terms of user base and
geographic coverage when compared As the number of property listings created
to more mature markets. This report on the Airbnb platform has increased, we
analyses the state of the market to date, have also seen a corresponding increase
as well as the underlying impact that the in the proportion of active listings from
short term rentals have had on Dubai’s 32% Q2 2016 to 37% Q2 2018.
hospitality market.
FIGURE 1
Dubai Airbnb listings and active listings
number of listings
25,000
20,000
15,000
ALI MANZOOR
Partner, Hospitality & Leisure 10,000
“As is now generally accepted,
holiday homes have had a 5,000
discernible impact on the
hospitality market; however
these affects are not felt
universally within Dubai.”
0
2015 2016 2017 2018*
*Note: Active properties are those which have an achieved rate in 2018. Year to June 2018 aggregate number of properties on Airbnb
Please refer to the important notice Source: Knight Frank Research, Airdna active listings
at the end of this report.
DUBAI HOLIDAY HOMES 2019
Dubai’s holiday home market accounts are widely marketed through Airbnb on a
FIGURE 3
for 2.0% of Dubai’s total households, the global basis, from a legal perspective this Active listings composition by unit type
highest proportion of all other key global is not permissible in Dubai, with those
hub cities (Figure 2). More so, these active who choose to do so risk facing hefty
listings account for 12.5% of the total fines.
number of hotel keys in Dubai, and while
The majority of supply in the market is
the number may appear low in relation
composed of one bedroom units, which
to other key global cities, it is important
account for 61% of total listings. Studios
to note that Dubai has a far larger
concentration of keys per household in
and two bedroom units account for 17% 8% 31% 61%
and 13% respectively. Three and four
relation to comparable destinations.
bedroom units which are traditionally
Of the 10,766 active listings in 2018, 61% more difficult to lease under the short term Entire home
were entire homes or apartments, 31% rental model account for just 5% apiece. Private room apartment
were private rooms and the remaining Shared room
8% were shared rooms. While individual
rooms in an apartment and shared rooms Source: Knight Frank Research
FIGURE 2 FIGURE 4
Dubai Airbnb listings and active listings Composition of supply, active listings 2018
SYDNEY
DUBAI
21,628
10,776
186 LONDON
508
66%
46% 61,314
US$ 169.59
84.10%
US$ 171.32 130
61%
78% 1 bedroom
74.04%
HONG KONG
1.2%
2.0% US$ 196.68
2,950
28.6%
12.5% 81.97%
902
1.0%
76%
40.9%
PARIS US$ 181.72
13%
88.63%
40,639 NEW YORK
0.1% Studio
17%
96
36,926
4.0%
93% 2 bedrooms
192
US$ 250.18
89% 5% 5%
77.80% 4 bedrooms 3 bedrooms
US$ 239.99
0.8% SINGAPORE
86.43%
34.2% 7,668
1.2%
Source: Airdna
195
32.0%
72%
US$ 158.36
87.00%
0.4%
12.0%
PARIS
Source: Knight Frank Research number of Airbnb ADR Airbnb hotel ADR
active listings (LCU) occupancy
hotel listings as % active Airbnb rentals
occupancy of households as % of hotel roomsDUBAI HOLIDAY HOMES 2019
Over the last three years we have seen a South districts. In Knight Frank’s Holiday density of holiday home units compared
substantial increase in residential supply Homes 2016 report we noted that the to 2016, and we have now started to
in Dubai. This has been the case in both vast majority of holiday home supply see short term rental accommodation
high density areas such as the Palm was located in Dubai Marina, the Palm appearing in new districts east of Sheikh
Jumeirah, Marina and Downtown Dubai Jumeirah, Jumeirah Beach Residence Zayed Road and in the more historic parts
and also within newer parts of the city (JBR), DIFC and Downtown Dubai. As of of Dubai north of Za’abeel Park (Figure 5).
such as the Arabian Ranches and Barsha 2018, these submarkets have a far higher
FIGURE 5
Dubai’s Airbnb listings
PALM JEBEL ALI
PALM JUMEIRAH
DUBAI MARITIME
CITY
PALM
JUMEIRAH BEACH DEIRA
RESIDENCE DUBAI MARINA
JUMEIRAH JUMEIRAH DEIRA
MEDIA CITY UMM SUQEIM WORLD TRADE AL RIGGA ABU HAIL
MINA JEBEL ALI AL SUFOUH AL WASL CENTRE
JUMEIRAH LAKES AL MANARA AL SAFA AL AL MAMZAR
TOWERS KARAMA
DOWNTOWN
AL BARSHA BUSINESS AL NAHDA
JEBEL ALI EMIRATES HILLS AL QUOZ BAY
VILLAGE JUMEIRAH BUR DUBAI
DUBAI
ISLANDS AL QUOZ INTERNATIONAL
INDUSTRIAL AIRPORT (DXB)
AL MERKADH AL QUSAIS
JEBEL ALI 2 GARHOUD
RAS AL KHOR
JUMEIRAH UMM RAMOOL AL TWAR
VILLAGE CIRCLE
NAD AL SHEBA 1 MEYDAN DUBAI MUHAISNAH
DUBAI SPORTS CITY FESTIVAL CITY
CITY
AL AL RASHIDIYA
DUBAI KHEERAN
INVESTMENT
PARK MOTOR CITY RAS AL KHOR
NAD AL SHEBA MIRDIF
ARABIAN INDUSTRIAL
RANCHES AREA AL MIZHAR
AL BARARI
AL WARQA
REMRAAM CITY OF ARABIA
DUBAI SILICON INTERNATIONAL
AL MAKTOUM OASIS CITY
INTERNATIONAL
AIRPORT (DWC) THE VILLA
AL YALAYIS
ACADEMIC CITY WARSAN
UMM NAHAD
AL SELAL
AL ROWAIYAH
Source: Knight Frank Research
“From the perspective of annual seasonality the holiday home market
is somewhat in-line with the Dubai-wide hotel market where demand
tends to be strong at both the start and end of the year, and dips during
the summer months. Where the figures differ however is within the
magnitude of change, as monthly holiday home performance tends to
TAIMUR KHAN exhibit greater seasonal variance than traditional hotels.”
Research ManagerDUBAI HOLIDAY HOMES 2019
FIGURE 6
Holiday homes ADR heat map
PALM JEBEL ALI
PALM JUMEIRAH
DUBAI MARITIME
CITY
PALM
JUMEIRAH BEACH DEIRA
RESIDENCE DUBAI MARINA
JUMEIRAH JUMEIRAH DEIRA
MEDIA CITY UMM SUQEIM WORLD TRADE AL RIGGA ABU HAIL
MINA JEBEL ALI AL SUFOUH AL WASL CENTRE
JUMEIRAH LAKES AL MANARA AL SAFA AL KARAMA AL MAMZAR
TOWERS
DOWNTOWN
AL BARSHA BUSINESS AL NAHDA
JEBEL ALI EMIRATES HILLS AL QUOZ BAY
VILLAGE JUMEIRAH BUR DUBAI
DUBAI
ISLANDS AL QUOZ INTERNATIONAL
INDUSTRIAL AIRPORT (DXB)
AL MERKADH AL QUSAIS
JEBEL ALI 2 GARHOUD
RAS AL KHOR
JUMEIRAH UMM RAMOOL AL TWAR
VILLAGE CIRCLE
NAD AL SHEBA 1 MEYDAN DUBAI MUHAISNAH
DUBAI SPORTS CITY FESTIVAL CITY
CITY
AL AL RASHIDIYA
DUBAI KHEERAN
INVESTMENT
PARK MOTOR CITY RAS AL KHOR
NAD AL SHEBA MIRDIF
ARABIAN INDUSTRIAL
RANCHES AREA AL MIZHAR
AL BARARI
AL WARQA
REMRAAM CITY OF ARABIA
DUBAI SILICON INTERNATIONAL
AL MAKTOUM OASIS CITY
INTERNATIONAL HIGH
AIRPORT (DWC) THE VILLA
AL YALAYIS
ACADEMIC CITY WARSAN
UMM NAHAD
LOW
Source: Knight Frank Research
FIGURE 7
Occupancy heat map
PALM JEBEL ALI
PALM JUMEIRAH
DUBAI MARITIME
CITY
PALM
JUMEIRAH BEACH DEIRA
RESIDENCE DUBAI MARINA
JUMEIRAH JUMEIRAH DEIRA
MEDIA CITY UMM SUQEIM WORLD TRADE AL RIGGA ABU HAIL
MINA JEBEL ALI AL SUFOUH AL WASL CENTRE
JUMEIRAH LAKES AL MANARA AL SAFA AL KARAMA AL MAMZAR
TOWERS
DOWNTOWN
AL BARSHA BUSINESS AL NAHDA
JEBEL ALI EMIRATES HILLS AL QUOZ BAY
VILLAGE JUMEIRAH BUR DUBAI
DUBAI
ISLANDS AL QUOZ INTERNATIONAL
INDUSTRIAL AIRPORT (DXB)
AL MERKADH AL QUSAIS
JEBEL ALI 2 GARHOUD
RAS AL KHOR
JUMEIRAH UMM RAMOOL AL TWAR
VILLAGE CIRCLE
NAD AL SHEBA 1 MEYDAN DUBAI MUHAISNAH
DUBAI SPORTS CITY FESTIVAL CITY
CITY
AL AL RASHIDIYA
DUBAI KHEERAN
INVESTMENT
PARK MOTOR CITY RAS AL KHOR
NAD AL SHEBA MIRDIF
ARABIAN INDUSTRIAL
RANCHES AREA AL MIZHAR
AL BARARI
AL WARQA
REMRAAM CITY OF ARABIA
DUBAI SILICON INTERNATIONAL
AL MAKTOUM OASIS CITY
INTERNATIONAL HIGH
AIRPORT (DWC) THE VILLA
AL YALAYIS
ACADEMIC CITY WARSAN
UMM NAHAD
LOW
Source: Knight Frank ResearchDUBAI HOLIDAY HOMES 2019
One of the major appeals of short term particularly important amongst corporate hotel supply in the market in aggregate.
rentals in relation to hotels specific to guests and more affluent leisure guests. As a result, we will continue to see this
Dubai is the widespread availability of premium achieved in the holiday home
Additionally, due to the spate of mergers
ancillary amenities such as swimming market, however as we continue to see
and acquisitions which have taken place
pools and gyms in residential buildings. residential development in secondary
within the hospitality sector since 2016,
Unlike other cities where such amenities locations we expect that this premium
we are likely to see greater consistency in
are not commonplace in residential is likely to start to reduce on average.
product offering globally and an increasing
buildings, their widespread availability Another key point of differentiation is
importance of loyalty programs.
narrows the gap in product offering the product offering – given that holiday
between the two product types. homes can range from one to four
Figure 8 below shows that the vast
Key Performance bedrooms, many of these unit types
majority of buildings in Dubai have
Indicators (KPIs) are far larger than traditional hotel units
and therefore can accommodate larger
features such as Wi-Fi, kitchen, washing From the perspective of annual
families or multiple households.
machines, pools and gyms which aligns seasonality the holiday home market is
the value proposition between the two somewhat in-line with the Dubai-wide From late 2017 to early 2018 we have
options to some degree. hotel market where demand tends to seen a divergence in achievable RevPAR
be strong at both the start and end of in the holiday homes and hotel market on
However, the data also shows that there
the year, and dips during the summer average where hotel RevPAR continued to
are some areas where hotels in Dubai
months. Where the figures differ however increase over this period whereas holiday
still maintain a clear advantage over the
is within the magnitude of change, as home RevPAR trended down. Over
holiday home market.
monthly holiday home performance tends this time period, only the 4 bedrooms+
First, the data indicates that there to exhibit greater seasonal variance than segment in the holiday home market has
currently are very few holiday homes traditional hotels. outperformed the hotel, although it seems
which classed as ‘Business ready’, only to now be falling in-line with the hotel
When comparing achievable rates
55% offer instant booking (Figure 8) and RevPAR.
between Dubai’s holiday homes and
not one property offers 24 hour check-in.
hotels we continue to witness the holiday In general hotels outperform the holiday
This, combined with the relatively rigid
home market outperform the hotel market homes market with the exception
cancellation policies, average response
by 64% year-to-date June 2018. Some of being summer months during which
time of six hours, deposits requirements,
the variation can be explained by the fact they are either on par or holiday homes
cleaning fees and Airbnb booking fees
that the holiday home supply is still very outperform.
(Figure 9) mean that holiday homes
much skewed towards Dubai’s upmarket
often have drawbacks not seen in the
areas such as Dubai Marina, JBR, the
hotel sector. These limiting factors help
Palm Jumeirah and Downtown Dubai
to create differentiation factors from a
(Figure 5). In contrast, Dubai’s hotels are
service perspective even if there is less
spread across the city, with secondary
of an amenity gap in Dubai in relation
locations forming the vast majority of
to other markets. These factors are
FIGURE 8 FIGURE 9
Common facilities in Dubai’s holiday The Drawback of Dubai’s holiday homes
homes
AED
WiFi 95% 50% 359.3 400
45% 41% 43% 42% 350
Kitchen 95% 40%
300
35%
Washer 90% 30% 250
25% 167 200
Pool 82% 20%
15% 150
15%
100
Gym 73% 10%
5% 50
Free parking 72% 0% 0
Flexible Moderate Strict
Instant booking 55% DUBAI HOLIDAY HOMES % OF HOLIDAY HOMES AVERAGE RESPONSE TIME AVERAGE
CANCELLATION POLICY WHICH REQUIRE A (MINUTES) CLEANING FEE (AED)
DEPOSIT
Dryer 51%
Business readyDUBAI HOLIDAY HOMES 2019
The impact of the holiday FIGURE 10
home market on Dubai’s Average occupancy rates
hotel market
100%
As is now generally accepted, holiday 90%
homes have had a discernible impact
80%
on the hospitality market; however these
70%
affects are not felt universally within
Dubai. As noted in our 2016 Holiday home 60%
report, unlike many other markets in which 50%
short term rentals are traditionally outside 40%
major hospitality nodes, in Dubai, short 30%
term rentals are concentrated within hotel
20%
districts. As such, from a geographical
10%
perspective, hotels in the Marina, JBR,
Media City, Downtown Dubai and Sheikh 0%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Zayed Road tend to be the most severely 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018
impacted. Even if not directly competitive,
holiday homes hotels holiday homes hotels holiday homes peak hotels peak season
holiday home supply in these locations average average season average average
has handicapped the ability of properties Source: Knight Frank Research, STR Global
to yield during peak periods which is
attributable to the fluid nature of short-
term rental supply which can be taken on FIGURE 11
and off the market almost instantaneously Average Daily Rate (ADR), in AED
at low marginal cost.
1,000 200%
Finally, from a product perspective,
900 180%
locally branded hotels that have no clear
800 160%
points of differentiation face more direct
700 140%
competition from holiday home supply 600 120%
as these tend to be commoditised in the 500 100%
eyes of guests. By contrast, properties 400 80%
with well recognised operators, unique 300 60%
attributes, extensive amenities, MICE 200 40%
facilities, and strong loyalty programs 100 20%
tend to be less impacted by the holiday 0 0%
homes market. However, with experience- Jul
2017
Aug
2017
Sep
2017
Oct
2017
Nov
2017
Dec
2017
Jan
2018
Feb
2018
Mar
2018
Apr
2018
May
2018
Jun
2018
based stays being introduced and loyalty
programs likely to follow, it is becoming Source: Knight Frank Research, STR Global holiday homes hotels holiday homes premium percentage (RHS)
increasingly more important for hotel
owners to view the short term rental
market as directly competitive to hotels
FIGURE 12
rather than a business model that targets
Hospitality market RevPAR performance
a different demand demographic. By
doing this, owners and operators can
1,600
formulate effective revenue management
strategies and give consideration to the 1,400
entire market, which in turn will protect the
1,200
value of their asset.
1,000
800
600
400
200
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018
studio 1 bedroom 2 bedrooms 3 bedrooms 4+ bedrooms hotel holiday homes average
Source: Knight Frank Research, STR GlobalRESEARCH
Taimur Khan
Research Manager
+971 56 4202 312
taimur.khan@knightfrank.com
HOSPITALITY & LEISURE
Ali Manzoor
Partner
+971 56 4202 314
ali.manzoor@me.knightfrank.com
VALUATION & ADVISORY SERVICES
Stephen Flanagan, MRICS
Partner
+971 50 8133 402
stephen.flanagan@me.knightfrank.com
CAPITAL MARKETS / INVESTMENT
Joseph Morris, MRICS
Partner
+971 50 5036 351
joseph.morris@me.knightfrank.com
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Matthew Dadd, MRICS
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Maria Morris
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Abu Dhabi Office Dubai Office Dubai Metro UAE Hospitality Market maria.morris@me.knightfrank.com
Market Review Q3 2018 Market Review Q3 2018 2018 Review & Forecast 2018
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