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Short-term vs. long-term: how the numbers stack up (Dubai, 2025)

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How we’re comparing:

  • Short-term rentals (STR): City-level benchmarks for ADR and occupancy, then area-specific purchase/rent data to translate into yields.

  • Long-term leasing (LTR): Current average annual rents and typical purchase prices by area.

  • Formulas:

    • STR gross revenue ≈ ADR × Occupancy × 365

    • Gross yield ≈ Annual rent or STR revenue ÷ Purchase price

Market benchmarks (Dubai, 2025):

  • Citywide STR performance (AirDNA): ADR ≈ US$199 (~AED 730) with ~56% occupancy → ~AED 149k gross per typical 1-bed if priced at city average.

  • Seasonality check (PriceLabs): Occupancy dips ~37–39% in Jun–Aug; peaks ~64% in Dec, ADR rising into winter—so monthly cash flow varies.

Case studies (1-bed examples)

Assumes standard, well-presented units; service charges and financing costs excluded (they apply to both strategies). STR cleaning is guest-paid; Tourism Dirham is guest-paid but you remit it (AED 10 - 15 per bedroom per night depending on Standard vs Deluxe classification).

1) Port Saeed (Deira)

  • Purchase price (avg 1-bed ask): ~AED 1.15M.

  • LTR: Avg 1-bed rent ≈ AED 62.6k/yr → ~5.4% gross yield.

  • STR (city-average pricing): ~AED 149k gross → ~13.0% gross yield.

    • Conservative tweak (older stock/airport adjacency): if ADR is –15% vs city avg, gross ≈ AED 127k → ~11.0% gross yield (assumption noted; benchmark basis above).


2) Downtown Dubai

  • Purchase price (avg 1-bed ask): ~AED 2.58M.

  • LTR: Avg 1-bed rent ≈ AED 152k/yr → ~5.9% gross yield.

  • STR (city-average pricing): ~AED 149k gross → ~5.8% gross yield (Downtown can out-earn city ADR in peak, but using conservative city averages here).


3) Dubai Marina

  • Purchase price (avg 1-bed ask): ~AED 1.90M.

  • LTR: Avg 1-bed rent ≈ AED 111k/yr → ~5.9% gross yield.

  • STR (city-average pricing): ~AED 149k gross → ~7.9% gross yield (Marina often tracks above-average ADR in winter).


What trims STR to “net”?

  • Management typically 15–25% of booking revenue. Using ~18% is common in Dubai.

  • OTA fees: Airbnb 3% host fee under split model (moving many PM accounts to 15.5% single-fee in late-2025); ~15%. Blend matters for your net.

  • Utilities (owner pays for STR): A typical 1-bed DEWA ~AED 300–600/mo (seasonal).


Rule of thumb: After typical management + OTA + utilities, STR nets often ~20–35% below gross but still exceeds LTR in Port Saeed & Marina on well-run units, and sits similar to LTR in high-priced Downtown (using conservative city-average ADR).

Why professional management changes the outcome

  • Revenue uplift: Professional/“multi-listing” hosts consistently achieve higher occupancy and revenue vs. casual hosts in peer-reviewed studies (e.g., +15% occupancy, +17% daily revenue observed in markets studied).

  • Execution: Local STR firms in Dubai run dynamic pricing, multichannel distribution, 24/7 ops—precisely the levers that raise RevPAR while reducing owner workload. Typical fee bands above.

  • Seasonality smoothing: Pro managers lean into winter peaks, minimum-stay tactics, and promotion in summer to protect occupancy. Dubai’s seasonal profile supports this approach.


Bottom line (2025)

  • If your goal is maximum income and you’re in mid-priced areas (e.g., Port Saeed/Marina): STRs typically outperform LTR on gross and net yields provided you use dynamic pricing and professional ops.

  • If you’re in premium, high-ticket areas (e.g., Downtown): LTR gross ≈ STR gross using citywide STR averages; STR can still win with professional management and peak-season ADR, but it’s more execution-sensitive.


Why STRs offer better traveler value (and book well)

  • Space & amenities for the price: With Dubai hotels running ~78–83% occupancy and H1 ADRs in the AED 620–745 range, well-priced holiday homes give guests more space/kitchen/laundry at or below comparable hotel nightly cost—especially for families and longer stays. ValuStrat+1

  • Local experience: Neighborhood stays near malls, metro, beaches, and creek promenades (e.g., Marina Walk, City Centre Deira/Creek) deliver the “live like a local” factor that hotels can’t match—one reason STR demand persists even as new supply arrives.

 
 
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