Dubai Homeowners Favor Vacation Rentals Over Leases

Increasingly More Dubai Homeowners Turn Apartments into Vacation Homes Due to Tenant Damage

In recent times, a significant shift can be observed in the Dubai real estate market: more and more homeowners are opting to utilize their properties as vacation homes or serviced apartments instead of long-term rentals. The trend is mainly driven by damages from illegal interior modifications and administrative and legal challenges related to tenants.

Illegal Partitions: Million-Dollar Expenses for Restoration

The Dubai Municipality and the Dubai Land Department jointly conducted a strict inspection campaign in June 2025 in neighborhoods such as Al Rigga, Al Muraqqabat, Al Satwa, or Al Raffa. These areas frequently experience unauthorized partitions and divisions, posing severe safety risks. Such modifications can not only weaken the building's structure but may also be dangerous from a fire safety perspective.

Many property owners were forced to remove these illegal modifications, with costs reaching up to 45,000 dirhams. In most cases, tenants not only made modifications without permission but often refused to vacate the property, even when there was a breach of contract.

Regaining Control: Why More Choose Vacation Homes

Particularly around Marina, Downtown, and Creek areas, many are turning towards short-term rentals as it allows for greater control over the property. When utilized as a vacation home, owners can not only inspect the property's condition more frequently but also strictly regulate the number of guests with permits issued by the Dubai Department of Economy & Tourism.

Aside from short-term rentals, professional operators manage bookings, cleanings, identification, and maintenance. In contrast, long-term tenants often informally sublet apartments to multiple unrelated individuals, leading to both legal and quality issues.

Benefits in the Short and Long Term

Operating residential units as vacation homes is appealing to owners for several reasons:

1. Compliance and Monitorability

Licensed vacation homes are regularly inspected, and an exact guest count is required, preventing illegal subleases.

2. Higher Level of Services

Operators continuously monitor bookings, cleanings, and guest identification, keeping the apartment in better condition than neglected long-term rentals.

3. Frequent Inspection, Regular Maintenance

Between short-term rentals, cleaning and post-leasing inspections are common, reducing wear and increasing the property's lifespan.

Is It Financially Worthwhile?

The question isn't just about control and condition—a switch to short-term lets can also be financially motivated. Especially in areas like Dubai Marina, Downtown Dubai, Palm Jumeirah, or Creek Harbour, where tourism is vibrant, vacation homes may outperform annual rental agreements.

It’s important to note that along with gross revenue, operational costs should also be considered. These include:

Operating fees, Utility expenses, Furnishing and maintenance costs, Government licenses, fees

Thus, net returns primarily depend on the traffic in the area, operator efficiency, and seasonal demand. In certain neighborhoods, stable annual family renters might be a better financial option than operating with uncertain bookings in the vacation model.

Market Transformation

Recently, it's observed that some owners, who previously maximized revenue through illegal partitioning solutions, are now facing transformation. Due to new regulations, many are forced to rethink their strategies. While some sell the affected apartments, others attempt to reposition them as serviced apartments or regulated vacation homes.

Experience shows that well-managed short-term rentals with professional backing can yield better returns even in a three-year span than traditional long-term leases—especially if the operator doesn't rely solely on online travel platforms.

Summary

In the Dubai real estate market, a clear shift is evident from long-term leases towards short-term, regulated vacation homes. The change is driven by tightened legal regulations, the desire for owner control, and efforts to maintain property condition.

While not all areas are equally suitable for tourism purposes, in regions where visitors are frequent and infrastructure is adequate, the vacation home model becomes an increasingly attractive alternative. With the right operator and adherence to regulations, this model offers a more stable and lucrative opportunity for Dubai homeowners in the long run.

(Source of article: Reports by Dubai homeowners and Dubai Department of Economy & Tourism.)