Dubai’s short-term rental (STR) market has always had a certain pull. The mix of transient workers, a steady stream of tourists, and relatively flexible rules around STRs made it easy for landlords to test the waters. Over time, that flexibility has turned into something bigger: a reliable investment that many now see as safer and more profitable than a long-term lease.
Even in May and June, months once considered off-season, operators like Air DXB reported occupancy rates close to 90%, which shows short-lets are no longer just a peak-season investment play, but a year-round strategy and asset class. That shift, from hobbyist to institutional, from seasonal to year-round, is what makes Dubai’s STR uptick different this cycle. It’s no longer just about landlords chasing high yields; it’s about how the short-let market is bleeding into the broader property cycle, changing how developers design projects, how investors balance their portfolios, and how much stock is left for long-term tenants.
Mid-term operators are also betting on growth. Colife, which furnishes and manages apartments for four- to twelve-month stays in Dubai, Hong Kong, and Istanbul, expects short-term rentals in the UAE to climb to about 18% in 2025, compared with a 13% rise for long-term rentals.
“We consistently target occupancy above 80%,” Peter May, the COO of Silkhaus, said. The rental and property management company runs its own listings platform and also notably markets units on Airbnb, with a portfolio spanning Dubai, Abu Dhabi, and Riyadh. “STRs are now a mature and established sector in Dubai with over 30,000 active units,” May explained. “For landlords, STRs are no longer a speculative play. They’re a strategic tool that offers flexibility and, in the right assets, superior returns.”
In prime areas like Dubai Marina, Palm Jumeirah, and Downtown, daily rates in peak season can outperform typical daily rates for annual rentals. Short-lets typically yield 10–15% a year before expenses, compared to 6–8% for long-term, according to Betterhomes.
That return gap has drawn many investors into the STR segment. Recent data from AirROI shows the average Airbnb in Dubai brings in about $23,667 a year and over 46% occupancy, with the average nightly rate being around $232. The returns are clear, especially on one-bedroom apartments and studios that are cheap to furnish and appeal to both business travelers and families on a budget. “One beds are a bit of a sweet spot because they’re a budget option,” said Burhan Hayat, Head of Sales for the UAE and UK at GuestReady. “But then they also fit individual and business travelers’ needs as well.”
They’re relatively cheap to furnish and tend to post the strongest occupancy rates, Hayat noted. “We’ve also got a few villas in our portfolio, but the smaller units are consistently where demand holds up best,” he said.
GuestReady is one of the operators watching the shift in investor behavior closely, as more landlords move from testing STRs to treating them as part of a long-term portfolio strategy. The global property management company oversees about 3,500 homes directly, and nearly 6,000 if you include landlords using its proprietary RentalReady software. The platform gives owners a dashboard to track bookings, pricing, and maintenance in real time, and helps drive repeat bookings across Europe and the Middle East. In Dubai, where its core markets are Marina, Downtown, and Business Bay, GuestReady says occupancy is around 85%, which is also slightly higher for the company than last year.
Hayat said landlords see STRs as a better investment fit than long-term leasing for a few simple reasons. Flexibility is one of them. “Owners can still use the property themselves from time to time, which isn’t possible with a year-long lease,” he said. For investors thinking of selling, STRs also make it easier to exit the market without being tied down to a 12-month notice period. And then there’s the upkeep. Properties in the short-term pool are cleaned and maintained constantly, so they’re always in good condition and ready for resale, viewings, or simply presented like a show home, Hayat explained.
Returns have long been part of the appeal. “Historically, you would definitely earn more through a short-term rental than a long-term rental,” Hayat said. He does warn, though, that over the past 18 months, the gap has narrowed. Long-term rents have surged, pushing yields closer together. Today, short-lets may generate 6–8% gross returns, versus 5–7% for long-term rentals — but in the right location, STRs can still deliver 15–20% more, Hayat noted.
At Silkhaus, May said the real shakeup is happening among property managers. With more units entering the STR pool, smaller players like individual investors are more likely to merge with bigger operators or disappear, leaving room for firms with scale to capture more shares. That’s where Silkhaus sees a lot of opportunity, May said.
The uptick in STRs listed in the market is happening against a backdrop of record demand. Dubai welcomed 18.7 million overnight visitors last year, a 9% jump from the year before, according to Deloitte’s Real Estate Predictions report. Much of that surge came from Europe, the GCC, and Asia, boosted by a packed calendar of events like the FIFA Beach Soccer World Cup, Coldplay concerts, and GITEX. Many of those arrivals were short stays tied to specific events, exactly the kind of demand that keeps holiday homes full during high-traffic periods.
“Our biggest churn driver is sales,” May said. For Silkhaus, the main reason units leave the short-let pool isn’t landlords switching back to long-term leases — it’s landlords cashing out altogether. Many landlords are taking the chance to cash out while resale prices are high. A few switch to long-term tenants as rents climb, but most of the units leaving Silkhaus’s portfolio aren’t going back into the rental pool at all; they’re being sold outright. That turnover, May added, reflects a market that’s stabilizing. Consolidation among operators shows the sector is moving away from side hustles and toward scale.
For investors, the question is whether STRs make sense as a long-term hold or just as a way to capture returns for a few years before selling into a hot market.
Mid-term stays are also becoming part of that mix. “We see mid-term as an important part of the portfolio and will continue to balance it,” May said. “That said, our core focus remains on the business traveler segment, which has been our strongest driver of growth and aligns with Dubai’s role as a regional hub.” Hayat echoed the trend, pointing to a surge in relocations. Many new arrivals can’t sign long-term leases until they secure their Emirates ID, creating demand for one- to three-month stays. “It’s a huge opportunity,” he said, “especially for investors looking to keep occupancy stable.”
Location is now a big part of the play. JVC, long seen as a budget option by renters, has been pulling solid occupancy and ADRs, Hayat said. Maritime City and Dubai Islands, on the other hand, are longer-term bets, with the real upside coming once projects are handed over. The Palm still performs in peak season, but it’s less suited to mid-term stays. Digital nomads and expats on short placements usually want to be in Downtown, Marina, or Business Bay — closer to offices, co-working spots, and the city’s day-to-day action.
That investment shift toward being more selective is something Ghada Benitez, founder of GG Benitez International, also sees among her buyer base. “The smartest investors at this point are being more discerning about what areas they’re buying into, who the developer is, even what type of unit they’re investing in,” she said. Benitez, who also hosts the Dubai Connect podcast where she breaks down how to buy into the short-term market, works mostly with North American clients priced out of the West’s Airbnb scene. In cities like San Diego, Toronto, and New York, recent tighter rules have pushed many investors out, a contrast that makes Dubai’s openness even more appealing.
“Investors need a licensed agent with boots on the ground who understands where Dubai is headed,” Benitez said. “Some areas may be hitting a ceiling, but there are still huge opportunities in others.”
The UAE’s edge in real estate becomes even clearer when stacked against other global hubs, Benitez added. In Málaga, Spain, where Benitez also operates in the real estate market, the country witnessed a strip down of more than 20,000 listings from Airbnb overnight, sending a shock through the market. Against that backdrop and on the global stage, Dubai looks like the outlier: a city where STRs are not just tolerated but encouraged. The Department of Economy and Tourism (DET) has built a straightforward licensing regime for holiday homes, rolled out a grading system for quality, and tied the sector into Dubai’s wider tourism strategy, which aims to attract 25 million visitors annually by 2025.
“Dubai is fortunate to have a proactive, pro-business regulator. The DET has built a strong framework for STRs, and recent measures, like mandatory licensing on OTAs and removing private room listings, have professionalized the sector,” Silkhaus’ May said. “We believe there’s still room to introduce higher barriers to entry to raise standards further, but overall, Dubai’s regulatory approach has been a net positive.”
That difference is pulling in a new wave of global buyers. Benitez, said the focus has shifted away from short-term flips toward portfolio strategies built on steady rental income. “Most of my investors aren’t coming to flip,” she said. “They’re positioning for long-term ROI, and that usually means luxury branded residences on the waterfront, which command higher rental returns.” For these buyers, Dubai’s STR market isn’t a side hustle anymore; it’s a core piece of how they build passive income.
However, while Dubai’s tighter rules have given investors confidence, they also sharpen the trade-offs. Annual rents surged sharply last year, up about 16% across the city, according to Cushman & Wakefield, before beginning to cool in 2025. Hayat said long-term yields now average 5–7%, compared to about 8% for STRs. In prime areas, that gap can stretch to 15–20%. Those stronger returns keep drawing units into the short-let pool — raising the question of how much long-term supply gets squeezed as a result.”
For tenants, the squeeze is already visible. Affordable communities like JVC and Discovery Gardens are seeing more stock diverted into the short-let pool, which means fewer year-long contracts for families and rising rents at the lower end of the market. It’s a shift that underscores how STRs are reshaping the rental market itself. Benitez points out that the real story isn’t about volume anymore, but about investors zeroing in on the right assets. The tension between a cooling long-term market and a still-profitable short-term one will shape what comes next. Investors aren’t asking whether STRs work anymore; they’re asking how to position for the next phase.
For Benitez, that phase is about being more discerning. “We’re not seeing a dip in growth,” she said, adding that the UAE’s tourism numbers won’t be dipping either.
“With more supply being handed over, the opportunity is still there; it just means investors have to be smarter about where and what they buy.” For her clients, that usually means branded residences and waterfront projects, assets that hold long-term value while delivering strong short-term returns.
Developers are already catering to that demand. Hayat said many new projects are being pitched as serviced apartments or branded residences, with yields built into the sales pitch. It’s no longer just about selling a home to an end-user. That shift blurs the line between real estate and hospitality and shows how central STRs have become to Dubai’s property picture.
Emaar Beachfront is a telling example, Hayat explained. The location is designed for transient demand. It’s steps from the Marina, close to business hubs, and right on the water. AirDNA data shows units there averaging about $46,300 a year in Airbnb revenue, with occupancy near 50% and ADRs of $394. For investors, it’s a neat fit: a prime spot that captures both tourism and corporate demand.
STRs aren’t just a side hustle anymore, they’re mainstream and influencing how projects are built, how investors allocate capital, and how much stock is left in the long-term pool. Looking ahead, May said the fundamentals remain strong. “Dubai’s inflows, its role as a business hub, and a stronger global economy will support both occupancy and returns,” he said. But he also pointed to consolidation among operators and tighter compliance as signs of where the sector is headed.
In other words, the STR uptick has already changed the market. What comes next is figuring out how far those ripple effects will reach.
