Holiday home rents in Downtown Dubai feel the pressure

Short-stay rents at Downtown Dubai could see a spike now that the uncertainty over holiday homes operating there has been lifted. These had come under pressure after several bookings for this week were cancelled because of this very uncertainty, when Emaar said all such listings had to cease by September 19.

But now, with holiday home operators getting the signal to continue from the emirate’s licensing authority, DTCM, they are hoping for a quick return of demand. “The week of September 23 — the Saudi National Day — is always crucial for Dubai’s hospitality sector, and that includes holiday homes as well,” said one operator. “But all through the last fortnight, there were cancellations of bookings from Saudi Arabia because there was no clarity over the Emaar move.

“Rates have been under pressure in the last days as these cancellations piled up. Now that the situation is clear, the sector is hopeful that something can still be salvaged from next week.”

Plus, there is also the competition from the hotels in the neighbourhood, where stays can be booked for Dh700 a night. To compete with these rates, holiday homes have had to pull down theirs as well.

Broad rate range

Typically, Downtown holiday home rates are between $50 a night to as high as $4,000, which feature apartments with all the bells-and-whistles. Saudi travellers’ demand tends to be for the premium end of the rate range.

“It is important to point out that traditionally, holidaymakers from Saudi Arabia make last-minute bookings,” said Shine Sunny, Owner of Raine & Home Holiday Homes. “We are now aggressively marketing Downtown units with discounts to make up for the earlier lack of efforts. We are sure they will take advantage of these new prices and the fireworks around Burj Khalifa and other festivities will all be a drawcard.”

Raine & Home had kept bookings open for its Downtown units even for the period after September 19, hoping — like others in the business — that DTCM would come up with a solution. “Besides, Plan B was in place to offer guests alternative accommodation in areas like the Palm, Culture Village and Marina if the shut down of holiday homes went through in Downtown.”

Pre-emptive measures

Meanwhile, holiday home operators are making pre-emptive moves to ensure there are less chances of friction with developers in future. “Our policy will be to make available units only to families,” said one owner. “If holiday homes businesses do our own vetting, or as much as possible, most of the points of difference with developers and owners associations will be resolved.”

Bigger worry ahead

But the bigger problem looms on the horizon. At a location such as the Downtown, more than 15 towers would be completed by 2024, and it is reasonable to expect many of these would feature holiday homes on lease. “Each tower will bring additional pressure on existing holiday lets — then it becomes a case of what sort of occupancy levels can be maintained through the year,” a source said.