Rental Market Shift in Dubai: Short-Term vs. Long-Term

Dubai landlords are increasingly weighing the choice between short-term and long-term rentals, influenced by the city's new digital Rental Index and building star rating system. Market sources indicate a slowdown in new short-term rental listings, with some landlords opting for annual leases due to the higher potential returns offered by properties with high star ratings. This shift is driven by the ability of highly-rated buildings to command premium rents and the perceived stability of long-term leases.

The star rating system, a key component of Dubai's Rental Index, allows landlords to set rental prices based on their building's rating. Newer buildings typically receive higher ratings, enabling landlords to charge more. Simultaneously, the short-stay market's growth has plateaued due to the influx of new units in 2024, reducing landlords' ability to demand high rates. Industry experts suggest a slight market correction, with companies failing to provide value potentially facing challenges.

Despite the shift, short-term rentals still hold value, with demand expected to surge during the Eid holidays and peak summer. However, the short-term market is experiencing a slowdown, with rates for staycations down compared to last year. Landlords are carefully considering factors like property flexibility and potential sale advantages when choosing between short and long-term rental options.

In other news, Tabreed has secured a major district cooling project at Palm Jebel Ali, with construction expected to begin in Q2-2025 and services starting in 2027. The project, a joint venture between Tabreed and Dubai Holding Investments, will require a Dh1.5 billion investment and provide approximately 250,000 RTs of cooling capacity.