Dubai’s short-stay rental market is showing signs of strain as a flood of new residential units tempers rate growth and raises questions for property investors.
While short-term rentals once offered landlords rapid income with minimal vacancy, recent data points to a 15% drop in average daily rates (ADR) and occupancy dips of up to 25%, especially during the recent Eid break. Many UAE residents chose overseas travel this season, pulling down demand.
“The market is oversupplied,” said Vinayak Mahtani, CEO of bnbme. “We saw a lot of units added, but demand didn’t keep up.”
As a result, some landlords are shifting focus. Several have pulled their units from short-term platforms and moved them into one-year leases, where rental growth remains robust. According to CBRE, Dubai's annual rental rates are up 11% year-on-year, bolstered by the new Digital Rental Index, which has empowered landlords to ask for higher rates.
“Summer 2025 will be a turning point,” said a property manager. “With more units completing soon, landlords must decide — short-term flexibility or long-term stability?”
For now, the long-lease market remains strong. But with Dubai's real estate evolving rapidly, investors are watching closely to determine which rental route will deliver the most consistent returns.
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