It is a very common and old practice, especially in the Italian, Spanish or French Riviera to rent out a personal property as a holiday-home to tourists. The short-term rental business has proven pretty successful in those countries with strong tourism affluence and since Dubai is working on becoming an international holiday destination, it is interesting to consider this investment opportunity.

By renting out a property on short-term basis a landlord has the chance to use the property for his/her own personal use, generate a high return of investment by letting it out to holidaymakers and at the same time benefit from the property value appreciation.

The short-term rental concept could be applied anywhere in the world but the real key to its success lays in its implementation within the local market in fact any successful business idea can be brought to Dubai and prove a complete disaster, the concept by itself is nothing new and certainly not invented in Dubai so the actual heart of the business is not much in the idea as it is in its execution.

Having the idea and the product (the property) is just about 10% of the business, what really matters is the marketing which I would value at 70% and the actual daily running which could be valued at 20%

Setting up an apartment for the short-term rental requires experience, interior designing skills, attention to details and plenty of time and resources to follow up the actual furnishing process, utilities connections, daily running and marketing.

Some details are extremely important and if overlooked, will compromise the stay of your guests hence it is essential to set up the property with the guests? needs in mind rather than following a questionable personal taste.

One detail that is consistently overlooked is the actual efficiency of the bedrooms? curtains, which in the majority of the cases don?t block the windows? light properly, this is usually due to lack of experience or to ?good bargain? ready-made curtains resulting in a horrible 6 am daily wake up call for your guests.

Another important aspect to acknowledge is the considerable investment to be made in purchasing the bathrooms face and body towels, it is in fact necessary to provide a high number of these so to allow a twice weekly replenishment and the same goes for bed sheets, quilt covers, pillow cases etc?

In most cases the ?do it yourself? schemes work pretty well when you do have experience, knowledge and passion about what you are engaging with, other wise it will simply result in complete frustration to say the least.

Without considering the daily management issues and the inevitable guests complaints even the twice-weekly house keeping service is a far more demanding task then what it seems?

A reasonable solution to this, especially if you are handling more then one property, is to refer the entire marketing and management to a professional agent who for a fee (usually 20% of the rental) will take the weight off your shoulders with a smile.

In the current market a 5 stars marina-view one bedroom apartment in Dubai Marina Face 1 (where all the cafés and restaurants are) will rent for approx AED 95.000/- per year if unfurnished, the same property can fetch up to a AED 235.000/- a year if rented out furnished on short-term basis and after deducting the 20% agency commission plus about AED 40.000/- for the 5 stars furnishing and approx AED 8.000/- a year for the utility bills, this will live the owner with a net AED 142.000/- (on occupancy rate of 79%)

The numbers speak for themselves however is important to remember that where there is a good return there is also a certain risk and many will agree that the most delicate figure of the above calculation is the occupancy rate which cannot be guaranteed in any property short-term rental management contract.

Keeping the above consideration in mind, would you wish to engage an agent for your short-term rental requirements, it would be wise to commit for an initial trial period of maximum six months, this period shall allow you to gather enough details and should give you a good idea about the reliability and actual potential of the agent/marketer you are dealing with.

Would you rather get more hands-on with the business, you could opt for a non-exclusive marketing agreement, also available in the market and you will be able to market your property through other agent/marketers and potentially increase your exposure however this is not necessarily the optimum solution in fact many agents will give priority to the properties of those clients with whom they have contractually committed with.

Posted by Janet Naisbitt-Bagley on December 13, 2008 at 12:00 AM

About Janet Naisbitt-Bagley
Janet Naisbitt-Bagley is affliated with ERA Realty Center, which is located in Cedar City, UT. For further assistance please use the contact information located on the right.




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