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 currently 10,766 active* listings out of Of the 10,766 active listings in 2018, peer short term letting boom particularly in a total of 20,395 properties which have 61% were entire homes or apartments, major tourism hubs such as Paris, London been registered on the Airbnb platform 31% were private rooms and the and New York, to name a few. remaining 8% were shared rooms. since 2010 (Figure 1). The total number 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 0 universally within Dubai.” 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 at the end of this report. active listings 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 and two bedroom units account for 17% 8% 31% 61% concentration of keys per household in 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 10,776 186 508 LONDON 66% 46% 61,314 US$ 169.59 US$ 171.32 130 61% 84.10% 1 bedroom 74.04% HONG KONG 78% 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 88.63% 40,639 NEW YORK 13% 0.1% Studio 96 36,926 4.0% 17% 93% 192 2 bedrooms 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 rooms DUBAI 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 SAFA AL WASL CENTRE JUMEIRAH LAKES AL MANARA AL AL MAMZAR TOWERS KARAMA DOWNTOWN AL BARSHA BUSINESS AL NAHDA JEBEL ALI EMIRATES HILLS AL QUOZ BAY VILLAGE BUR DUBAI JUMEIRAH DUBAI ISLANDS AL QUOZ INTERNATIONAL INDUSTRIAL AL MERKADH AIRPORT (DXB) AL QUSAIS GARHOUD JEBEL ALI 2 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 RAS AL KHOR MOTOR CITY NAD AL SHEBA ARABIAN INDUSTRIAL MIRDIF AREA AL MIZHAR RANCHES 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 Manager DUBAI 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 SAFA AL WASL CENTRE JUMEIRAH LAKES AL MANARA AL KARAMA AL MAMZAR TOWERS DOWNTOWN AL BARSHA BUSINESS AL NAHDA JEBEL ALI EMIRATES HILLS AL QUOZ BAY VILLAGE BUR DUBAI JUMEIRAH DUBAI ISLANDS AL QUOZ INTERNATIONAL INDUSTRIAL AL MERKADH AIRPORT (DXB) AL QUSAIS GARHOUD JEBEL ALI 2 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 RAS AL KHOR MOTOR CITY NAD AL SHEBA ARABIAN INDUSTRIAL MIRDIF AREA AL MIZHAR RANCHES 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 SAFA AL WASL CENTRE JUMEIRAH LAKES AL MANARA AL KARAMA AL MAMZAR TOWERS DOWNTOWN AL BARSHA BUSINESS AL NAHDA JEBEL ALI EMIRATES HILLS AL QUOZ BAY VILLAGE BUR DUBAI JUMEIRAH DUBAI ISLANDS AL QUOZ INTERNATIONAL INDUSTRIAL AL MERKADH AIRPORT (DXB) AL QUSAIS GARHOUD JEBEL ALI 2 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 RAS AL KHOR MOTOR CITY NAD AL SHEBA ARABIAN INDUSTRIAL MIRDIF AREA AL MIZHAR RANCHES 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 DUBAI HOLIDAY HOMES 2019 One of the major appeals of short term particularly important amongst corporate hotel supply in the market in aggregate.