Short-term rental often shows higher gross income, but costs and effort are much higher too. Here's how to compare the two models on a net basis for your own unit.
Dubai offers two main rental models: annual (long-term) leases and short-term holiday homes listed on platforms like Airbnb or Booking. Both can work, but their risk and effort differ a lot.
Long-term rental
- Leases usually run for one year and must be registered in Ejari.
- Rent is traditionally paid in 1–4 cheques in advance, though monthly payment is spreading.
- Security deposit: typically 5% of annual rent for unfurnished units.
- Rent increases are capped by the DLD/RERA rental index, and tenants must be notified in advance.
Pros: predictable income, low effort, low management cost (commonly 5–8% of annual rent), less wear and tear. Cons: lower gross income, and you can't reprice for a year.
Short-term (holiday home) rental
- The unit needs a holiday home permit from Dubai's Department of Economy and Tourism (DET), either in your name or through a licensed operator.
- Building rules may prohibit or restrict it, so check before you buy.
- A per-night Tourism Dirham fee applies.
- The unit must be fully furnished and equipped.
Pros: higher gross income in strong locations, flexibility for personal use, seasonal pricing. Cons: full-service operators typically charge 15–25% of revenue plus cleaning, the owner pays utilities, summer brings strong seasonality, and there are furnishing and platform fees.
Compare on a net basis
Advertised "8–10% Airbnb yields" are almost always gross.
Long-term net = annual rent − service charges − management − maintenance − insurance
Short-term net = (average nightly rate × booked nights) − platform fees − management − cleaning − utilities − service charges − permits − furnishing depreciation − maintenance
In practice, short-term letting usually wins clearly only in tourist-strong locations (Downtown, Marina, Palm, JBR) with good occupancy and professional management.
Run the numbers
The Rental tab of the mortgage & ROI calculator compares long- and short-term side by side, with occupancy, fees and costs, and the Analysis tab shows annual cash flow, break-even and IRR. For a quick gross/net check, use the rental yield calculator.
Summary
- Want passive, predictable income managed remotely? → Long-term.
- Prime tourist location and occasional personal use? → Short-term with a professional operator.
- Either way, compare net yields and check your home-country tax rules.
This article is for information only and is not investment advice. Rental rules, fees and permit requirements change; verify current regulations before letting.
Don't take my word for it, run the numbers
Check the numbers in this article against your own figures.
