Short-Term vs Long-Term Rentals in Dubai: Which One Is Right for You?

July 23, 2025
Real Estate
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08 mins

Short-Term vs Long-Term Rentals in Dubai: Which One Is Right for You?

Dubai’s real estate market is a lively and dynamic beast, offering prospective investors and landlords two separate utilization choices: short-term and long-term rentals.

Considered one of the most powerful travel and commercial destinations in the world, Dubai attracts millions of tourists and expats into the city each year.

The travel dynamics create significant demand for both rental options. But what option is right for you?

Investors are drawn to short-term rental options based on the potential for higher returns, the options for use flexibility, and the benefits of being in tourist-heavy markets, such as the Downtown Dubai or Palm Jumeriah location.

Alternatively, long-term rentals could come to fruition as the investor is more familiar with that product, with potential for stabilised and long-term returns with a constant income and less operational activity in tourist market targets, such as Jumeirah Village Circle or Dubai Silicon Oasis.

This article aims to investigate the rental options in detail, focusing on the ROI prospects and capitalisation rates, costs of operations and use, tenant types, licensing and registration requirements, risks in the current market conditions and risks facing both markets moving forward.

In combining fixed values, pro-user expert commentary and suggestions, and market and area expert guides, you will understand the structure and applications and how they align with both segments of the real estate markets within Dubai.

Interesting? Lets get straight into it.

Market Overview

Dubai has had about 17 million foreign visitors in 2023, further putting Dubai on the map as an area of tourism and commerce.

Frequent travelers have a habit of using short-term rentals primarily in the tourism driven areas of the city such as Dubai Marina, Downtown Dubai and Palm Jumeirah.

Long-term rentals make up the underlying residential market. Because of the continual influx of expatriates and professionals, areas such as Jumeirah Village Circle. Dubai Silicon Oasis and International City are always well-subscribed.

These areas are attractive because they provide a consistent income stream through rent, to appeal to tenants who are settling down, and as the space for tenants to see their lifestyle in a way where they are making a more permanent decision.

Here’s a table highlighting the key differences between short-term and long-term rentals in Dubai.

Factor	Short-Term Rentals	Long-Term Rentals
Target Tenants	Tourists, business travelers	Families, professionals
Average Income	AED 160,000 – 180,000	AED 100,000 – 110,000
ROI	12% – 15%	5% – 8%
Occupancy Rate	60% – 75%	85% – 95%
Flexibility	High – owner can use/sell anytime	Low – lease-bound
Stability	Low – seasonal demand	High – fixed monthly income
License Needed	DTCM license & Tourism Tax	Ejari registration only
Best Areas	Downtown, Marina, Palm Jumeirah, JBR	JVC, Silicon Oasis, Al Nahda, Int’l City

Financial Returns: Which Offers Better ROI?

Short-term rentals can undoubtedly provide more gross income than long-term leases. For example, in Dubai Marina, one-bedroom apartments are renting for approximately AED 500 a night on Airbnb (or similar short-term rental websites).

If that one-bedroom apartment is rented at 60-70 % of the time, it can provide AED 180,000 gross in a year.

Compare this temporary apartment with an existing lease and the same one-bedroom apartment would earn you a rental income revenue of approximately AED 100,000 to AED 110,000 over a full year, long term period.

It is important to keep in mind that even though long rental revenues may not provide as much gross income as short-term rental income, they are great for an investor that enjoys the security and reliability of a long-term lease for an income stream when established, especially if there is debt to service.

According to DubaiRealtyIndia site – short-term rentals in Dubai provide an average ROI (Return On Investment) of 12-15%, while Long term rentals only provide 5-8% ROIs.

Table: Financial Comparison

Metric	Short-Term Rental	Long-Term Rental
Average Annual Income	AED 160,000 – 180,000	AED 100,000 – 110,000
ROI	12% – 15%	5% – 8%
Occupancy Rate	60% – 75%	85% – 95%
Yield on AED 1M Property	10% – 13%	6% – 7.5%

Costs and Licensing: What’s the Investment?

A license from Error! Hyperlink reference not valid.) is required for a short-term rental. Licensing and permits typically start at AED 1,520 for the license and AED 370 to AED 1,200 depending on the unit’s size for annual permits. You must also pay the Daily Tourism Dirham Tax (AED 10 per day per room) just as you must as short-term landlords, unless their guest rent is longer than 30 days.

Short-term landlords are also liable for the fixtures, furnished utilities (about AED 1,000/month), internet, cleaning service, property management service. However, all of these would take approximately 20% of the rental income when outside help is needed for those tasks.

Long Term rentals have lower up-front costs. Utilities are paid by the tenants, property owners are not required to furnish the unit if they are renting unfurnished, you have lesser licensing features to concern yourself with, just Ejari registration, which is AED 180.

Flexibility vs Stability

One key differentiation between investing in short-term rentals and long-term is flexibility versus stability.

As a short-term rental property owner, there is flexibility for property owners to occupy the rental unit during off-peak seasons or to sell the property without having to fulfill the length of a lease. If you do not mind getting your hands dirty, short-term rentals may be best for investors looking for a somewhat customized experience. An investor with some excess cash and a management company can have their management company manage bookings, guest experiences, and consents on their behalf.

Landlords, on the other hand, with a long-term rental find peace-of-mind in that they just have guaranteed monthly income that is known. For example, once a tenant signs a lease, the landlord has a guaranteed income until the length of the lease expires. Thus, is prepaid prior to expected monthly income by the use of a post-dated check system. The long-term landlord does not have to engage in the high frequency of marketing the property as tenants may only turnover once a year or a few years in some circumstances.

Megapolis.ae indicates long-term rental averages have an occupancy of the order of a guaranteed 90% to 95%, with little administrative duties.

Also Read: High-Rise Living vs. Gated Community Living in Dubai: What to Consider

Risks and Challenges

Short-term rentals provide an option which has a better earning potential, however, short-term rentals can cause issues for owners. Moreover, income can seasonal: income can boom in winter months and crash in the hot summer months. And for several reasons, owner-occupied and costs (guest acquisition, cleaning, maintenance, platform commission) can choke profits.

Also, while regulatory requirements can cause issues in some markets with long-term rental, they are stricter here. Owners must obtain and maintain mediatory quality availability and comply with DTCM license regulations forever.

Long-term rentals are more stable, but have their own risks risks. If a tenant must be removed through a legal process with poor non-payment history, it can take time to sort, and a landlord could lose rent after 1-month non-payment, plus legal costs of course. Also, a rent increase is legally regulated by Dubai’s Rental Index Law so an owner may not be able to raise rents per their personal needs which may not help yields.

Ideal Tenant Profiles

What are the types of tenants for Short-Term Rentals (City Apartment Model) and Long-Term Rentals (Home Rental Model)?

Tenants for your short-term rental (City Apartment Model) may be travelers, business travelers, or short-stay expats looking for a furnished apartment. Generally, tenants are willing to pay a premium for flexibility and location.

Tenants for long-term rentals (Home Rental Model) will be familiar to most: families, students, working professionals. Most long-term tenants place value on affordability and consistency. Long-term tenants usually sign a 12-month lease and look for a semi-furnished or unfurnished apartment or house.

Also check out our latest article on Dubai Creek Harbour.

Which Areas Are Ideal for Each Model?

Some locations in Dubai lend themselves naturally to one rental model versus another:

Best for Short-Term Rentals:

Downtown Dubai
Dubai Marina
Palm Jumeirah
Jumeirah Beach Residence (JBR)

Best for Long-Term Rentals:

Jumeirah Village Circle (JVC)
Dubai Silicon Oasis
International City
Al Nahda

These recommendations are based on tenant behaviour, proximity to tourist attractions, and average rental yields through TopLuxuryProperty.com.

Future Trends

As we look toward 2025 and beyond, both the rental markets will change. The real estate pipeline in Dubai suggests that possibly between 72,000 – 182,000 new units will be delivered which will likely alter the landscape for long-term rentals more than for short-term rentals. However, Dubai’s rapid ascendance as a remote work destination, or global events destination, better supports short-term property investments.

Digital transformation is also reducing the complexity of managing either rental type. Landlords now have a wide suite of tools to assist them, from AI powered pricing solutions to centralized property management setups.

Conclusion

When it comes down to a decision for short-term versus long-term rentals in Dubai, the choice is for you to make based on your investment style, time commitment and risk tolerance.

If you are looking for high returns, comfortable with variability, and targeting areas frequented by tourists in Dubai, short-term rentals can be extremely lucrative, although this is highly dependent on time commitment, investment, and the managerial elements you put in place.

If you are looking for a steady income with less variability and administrative burden, long-term rentals will provide the comfort level and sustainable returns you’re looking for and the returns are even more appealing in family communities.

At the end of the day, there isn’t one right answer to the question above – both models provides opportunities for success in Dubai, but you are only going to gain success if you select the model that is aligned to your strategy.

Have questions or need help choosing the right investment area in Dubai? Let us know in the comments or contact our team for a free consultation!

For more information on investing in Dubai real estate, get in touch with our highly experienced professionals at TAQ Global Properties: