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Understanding the difference between subleasing and renting in Dubai isn’t just about knowing real estate stuff—it’s about making a choice that could significantly impact your finances.
Whether you’re a property owner looking to get a good the best ROI or you’re just eyeing the lucrative Airbnb market, you need this info.
Think of it like choosing between a bespoke suit and one off the rack. Both will cover you, but the fit, flexibility, and fine print can vary wildly.
You dig?
Now let’s explore the differences between these two.
Subleasing is renting an apartment as a regular tenant and then setting it up as a short-term rental on platforms like VRBO, Airbnb, or Booking.com.
Photo by: Jonathan Borba
It’s like being the middleman in a real estate sandwich (cheesy reference, we know). It’s also known as subletting, and here’s how it works:
Let’s put the sandwich scenario aside for a bit. Before you jump on the subleasing trend, here’s the legal stuff you need to know:
Failing to comply with these subletting regulations in Dubai could land you in hot water jail with hefty fines or legal issues.
Long-term renting in Dubai is the more traditional route. It’s paying for an entire apartment for 12 months or more, with the intention to live in it, or (cough, cough) — set it up for a short term rental.
In Dubai, long-term rental agreements usually look like this:
Compared to cities like New York or London, Dubai’s rental market is relatively young but rapidly maturing. Dubai is that one country where the rental laws are designed to protect both tenants and landlords in the following ways:
Let’s break down the key differences, but majorly from the perspective of a “tenant”:
Photo by: Tima Miroshnichenko
Subleasing is typically short-term (think Airbnb) – from a few days to a few months. On the flip side, Renting is long-term, with most contracts lasting 12 months or more.
A vivid scenario of subleasing vs renting:
Long Term Renting: Sarah rented a 1-bedroom apartment in Dubai Marina for AED 60,000 per year. Subleasing: She got permission to sublease and listed it on Airbnb. While she made AED 100,000 in a year, she spent AED 25,000 on management, cleaning, and additional wear and tear—still coming out with profit, but with more effort involved.
Hard truth—no.
But then, it depends on the perspective you’re asking from. If you’re a property owner considering a tenant that plans to sublease your apartment – you can propose a revenue share model, which makes it more profitable.
Imagine the scenario below;
Say you agree on a revenue share model, i.e the tenant pays you a % of the Airbnb earnings, PLUS the original yearly rent, then it’s smart to agree to the subleasing of your apartment. On the flip side — if your apartment is in a location where you don’t easily get yearly tenants, and someone proposes an offer for long term rent, even IF they plan to use it as a sublease on Airbnb—it may make sense for you to agree to such proposition, since you’re reassured of a steady yearly rent.
Photo by: Fauxels
Again, on the flip side, if you aren’t comfortable with multiple people using your apartment, then maybe you shouldn’t consider allowing a tenant to sublease your apartment.
Let’s use a hypothetical 1-bedroom apartment in Dubai Marina:
Aspects | Costs |
Annual Rent | AED 70,000 |
Potential Annual Income | AED 120,000 |
Furnishing (one-time) | AED 20,000 |
Cleaning and Maintenance | AED 15,000 |
Utilities | AED 10,000 |
DTCM License | AED 1,500 |
Net Profit In 1st year | AED 23,500 |
Net Profit In 2nd year | AED 43,500 |
Typical lease terms for long-term rentals in Dubai include:
Some of these terms can be negotiated though. Don’t hesitate to discuss your needs with potential landlords or agents.
Earnings from subleasing on Airbnb in Dubai can vary widely, depending on:
On average, you might earn 20-40% more than long-term renting. For example, an apartment with an annual rent of AED 80,000 could potentially generate AED 100,000-120,000 through short-term rentals.
However, remember to factor in additional costs like furnishing, cleaning, and management fees when calculating your potential profit.
Key risks of subleasing in Dubai include:
Avoid these risks by ensuring full legal compliance, proper insurance coverage, and considering professional property management services.
Yes, you absolutely need special permission to sublease your rented apartment in Dubai. Here’s what you need:
Without these, you risk HEFTY fines and potential legal action. Scure all necessary permissions before listing your property for short-term rentals.
Transparency is key in Dubai’s real estate market.
And if you’re ever in doubt of any decision, consult with a local real estate expert, property manager, or legal advisor to steer you in the right direction.
Ciao :))
Get access to our 5-day training course on managing your vacation rental property in Dubai.
Learn More