A 2025 Comparison of Long-Term Rentals & Short-Term Rentals in Dubai 

As a property owner, you’re probably wondering whether to opt for steady, predictable income – with long-term rentals or cash out from the “tourist rush” with vacation rentals. 

It’s a tough call, but – we’ve got your back. 

In this guide, we’ll break down the nitty-gritty of long-term and short-term rentals in Dubai – so you can choose wisely.

TL;DR: Key Takeaways

• Short-term rentals provide higher income potential and flexibility, but require more active management
• Long-term rentals offer stability and consistent income, with lower management requirements
• Long-term rentals yield about 3-5% annual returns, while short-term rentals can reach 5-9%
• Holiday homes are subject to more regulations and licensing requirements in Dubai
• Property location and amenities play a crucial role in the success of both rental types

Is Dubai’s Rental Market Profitable?

Hollup.

Before we start comparing loong term and short term, let’s take a look at the overall rental market in Dubai. Is it even worth it? Hmmn maybe. Nah scratch that. It IS. And if the caps don’t convince you, take a look at the facts (even Eminem can’t compete with those rhymes).

Dubai’s population growth, expected to reach 5.8 million by 2040, fuels long-term rental demand.

Cool right? Hold on, it gets better.

The city’s efforts to diversify its economy beyond oil – is attracting a range of businesses, further boosting rental needs. Tourism also plays a significant role, with 14.36 million international visitors in 2022 increasing demand for the short-term rental market.

Recent government initiatives like the Golden Visa program, is also bringing in more long-term residents and investors. This has contributed to rising rental rates, with average prices increasing by 20-25% year-on-year in popular areas.

Long-Term Rentals in Dubai

Long-term rentals provide consistency. Typically, these leases run for 12 months or more, providing a steady foundation for both landlords and tenants.

The Upsides of Long-Term Rentals

1. Consistent Cash Flow: Long-term leases mean predictable monthly income. You’re not left guessing when your next payday is coming.
2. Lower Vacancy Rates: With tenants locked in for a year or more, you’ll spend less time actively searching for new occupants. This translates to fewer periods where your property sits empty and unprofitable.
3. Reduced Turnover Costs: With fewer tenant changes, you’re not constantly paying for cleaning, repainting, or fixing up the place between occupants – giving you more profit to hold on to.
4. Tenant Investment: Long-term renters often treat the property as their home, potentially taking better care of it. They might even make minor improvements, thereby adding more value to your investment.

Challenges of Long-Term Rentals

• Market Inflexibility: When you’re locked into a long-term contract, you can’t quickly adapt to market changes. If rental rates in Dubai suddenly spike (as they’ve been known to do), you might will find yourself earning below market value.
• Problematic Tenants: A difficult tenant in a short-term rental is a brief inconvenience. In a long-term lease? It’s a prolonged headache migraine. Proper screening is crucial, but even then, issues can arise months into a tenancy.
• Gradual Wear and Tear: Over time, even the most careful tenants will cause some property degradation. This slow accumulation of wear can necessitate more renovations when the lease finally ends.

Long-term Rental Yields in Dubai

Expect the following average annual rents for popular apartment configurations:

• Studio: AED 60,000 to AED 80,000
• 1-bedroom: AED 80,000 to AED 120,000
• 2-bedroom: AED 120,000 to AED 180,000
• 3-bedroom: AED 180,000 to AED 250,000

It’s worth noting that these figures aren’t set in stone. Dubai’s real estate market can shift like a shapeshifter, influenced by factors like economic policies, global events, and even local development projects.

Short-Term Rentals in Dubai

More like short term money. 🙂

Photo By: CottonBro Studio

Thanks to MILLIONS of people travelling to Dubai every single year, short-term rentals have become SO profitable. Let’s explore this in more detail.

The Upside of Airbnb Rentals

1. Higher Potential Returns: During peak seasons, daily rates can skyrocket. A well-managed property in a prime location can earn significantly more than its long-term rental counterpart.
2. More Flexibility: Got family visiting? Block off those dates. Want to use the property yourself? No problem. You’re in control of your calendar.
3. Capitalize on Events: When major events hit town (think Expo 2020 or the Dubai Shopping Festival), demand—and prices—surge. It’s like having a money printer during these periods.
4. Furnishing Freedom: You can deck out your place however you like. No need to cater to a long-term tenant’s tastes.

The Challenges of Vacation Rentals

• Management Intensity: Short-term rentals are needy. You’re constantly juggling bookings, check-ins, cleaning, and maintenance. It’s a 24/7 job unless you hire help.
• Occupancy Uncertainty: Unlike long-term rentals, your income can ALSO fluctuate wildly. One month you’re booked solid, the next you’re dealing with vacancies.
• Wear and Tear: With different guests (and with frequency), your property faces more wear.
• Potential Legal Hiccups: Fail to comply with short term rental regulations, and you could face fines or even property closure. Staying on top of changing laws is crucial.

Short-term Rental Yields in Dubai

Comparing Long and Short term Rentals Using Specifics

Okay now that you understand how short and long term rentals work, alongside their pros and cons, let’s take them band4band specifics to specifics.

1. Legal Considerations of Long Term Rentals and Vacation Rentals In Dubai

Dubai’s rental market is well-regulated, offering protections for both landlords, tenants, and guests:

• RERA Registration: All long-term rental contracts must be registered with the Real Estate Regulatory Agency (RERA). This isn’t just a formality – it’s a legal requirement. On the other hand for short term rentals, you must obtain a holiday home license from the Department of Tourism and Commerce Marketing (DTCM).
• Ejari System: This online portal is used for registering tenancy contracts. It’s more than just paperwork; it’s your official record of the agreement. With vacation rentals, you wouldn’t need to bother about this.
• Rent Caps: If you own a long term rental, you’re subject to rent caps on your apartment. You can’t increase rent unless the current rate is 10% below market value. On the flip side, you have unlimited bandwidth to increase the prices of your Holiday Homes rental.

2. Profitability Scenarios

3. Maintenance Comparisons Between Long Term Rentals and Holiday Homes

4. Risk Comparisons Between Airbnb Rentals and Full Time Tenancy

Outro Thoughts: So What’s The Verdict?

Hmmn. It’s complicated.

Choosing between long-term and short-term rentals in Dubai isn’t a one-size-fits-all decision. It depends on your property location, management capacity, risk tolerance, and financial goals. Especially risk – that’s the major determining factor.

Long-term rentals offer stability and lower management overhead, making them ideal if you prioritize steady income.

Short-term rentals provide higher potential returns and flexibility – but demand more active management and carry higher risks. If you’re willing to put in the work (or hire a management company) to maximize your property’s potential, go for it.

Homevy Tip: You can blend strategies, using short-term rentals during peak seasons and longer leases during slower periods. This hybrid approach can offer the best of both worlds if you’re not afraid of juggling things.

Ultimately, success in Dubai’s rental market comes down to understanding your property’s strengths, the market itself, and your investment goals. Whether you go long, short, or somewhere in between – stay informed through it all.