Scale and flexibility got Dubai's holiday-home operators through the war. A recovery — and a rent reform — are both testing what comes next

The regional conflict has gutted short-stay leisure bookings across the city, but short-term rental operators who'd already built out monthly-stay inventory came through largely unscathed, as demand held among those seeking flexible stays. Now, just as that flexibility has proven itself, Dubai's own rental reforms are angling for some of the same tenants.

Short leisure bookings fell sharply after the mid-March escalation, co-founder and managing director of rental property manager First Class Property Management Luis Santos tells EnterpriseAM, while demand for monthly stays proved more resilient, driven by new arrivals searching for permanent homes, residents awaiting handovers, business travelers on longer projects, and guests seeking flexibility without a year-long commitment.

Relocating professionals, project workers, residents waiting for handovers, and people unwilling to immediately sign a 12-month tenancy have become an important source of demand, Zacky Sajjad, director of business development and client relations at Cavendish Maxwell, also tells us.

The result: Operators solely relying on tourists felt the disruption more acutely than those catering to longer stays.

By the numbers: Market occupancy fell to 47.7% in 2Q 2026, while average daily rates (ADR) dropped 17.9% to AED 373, as per First Class’ Short-Term Rental Index. First Class’ own portfolio, however, saw 87.1% occupancy on the back of longer stays, with nearly 69.4% booked nights and an average stay of 21.3 nights, compared with a market median of six. Active listings stood at 33.7k at the end of 2Q, up 10.2% y-o-y but down from a January peak of 36.5k, with the number falling further to around 30.9k in September, as some operators exited the market and booking platforms removed unlicensed properties, Santos says.

(Quick sidebar: First Class works with 464 active owners, with 95% of its inventory in Dubai. The company has grown from three units at launch in 2020 to 588 units by August.)

For context: Professional operators already control most of Dubai's short-term rental market, and the city's licensing regime is raising the cost of staying in casually. “Dubai's short-term rental market has become considerably more professional” over the past two to three years, Sajjad tells us. What began as a market of individual owners listing directly has shifted toward professional operators running dynamic pricing, centralized housekeeping, revenue management, and dedicated guest services, he says — and while no single dataset gives a definitive citywide split, commercial data supports the view that professional operators now hold the majority of supply.

SOUND SMART- The regulatory line runs straight through that split. Individual homeowners can register up to eight holiday-home units before they need a Vacation Homes Rental trade license and have to meet Dubai Economy and Tourism's full operational requirements. Above that threshold, casual hosting isn't really an option anymore.

“Licensing has professionalized the market. The permit regime sets a real bar, with operator registration, per-unit permits, safety and quality standards, and Tourism AED reporting,” helping push the industry out of its informal phase, Sajjad says. This has in turn raised the cost of entry and removed unlicensed listings, gradually favoring larger, compliant operators over casual hosts, he says.

Scale has its privileges: Furnishing, cleaning, maintenance, ins., tech, licensing, and guest support are expensive — larger portfolios can spread those costs and negotiate better procurement agreements, Sajjad explains. “The hurdle rate has unquestionably increased. For a professional operator running 100 units, many of those costs can be shared. For somebody running one apartment, they cannot.”

A revival is already starting

“We started September at 45% occupancy and we’re looking at closing the month at 80-85%, which is a strong September,” Vinayak Mahtani, founder and CEO of Bnbme Holiday Homes, told DubaiEye 103.8. The firm saw bookings plunge 70-80% in March and April before recovering to last year’s levels by July and August.

This tracks with what’s happening at hotels: Average displayed room rates jumped 86% across 15 hotels near Dubai World Trade Center on busy September dates due to a busy events calendar, as we reported earlier this week.

The revival also had a government-funded tailwind: As part of the AED 1 bn stimulus package, effective from April, Dubai rolled out targeted three-month fee deferrals for hotels, hotel apartments, and holiday homes, later suspending the Tourism AED and hotel sales fees, while postponing trade license, municipal and other administrative charges, giving operators some breathing room.

When annual rents bend the rules

Dubai's recently launched Flexi Rent initiative is likely to intensify competition most in the medium-stay market — particularly for the segment sitting between a tourist stay and a conventional annual tenancy, Sajjad says. “Historically, one reason some residents have paid a premium for furnished short-term accommodation has been flexibility, avoiding large rental cheques, deposits, and long commitments. If conventional landlords increasingly offer monthly payments, part of that financial flexibility premium disappears,” he explains.

REMEMBER- The Dubai Land Department has a ‘rent now and pay later’ scheme in the works, set to kick off in September, where tenants can spread annual payments over up to 12 months at zero interest.

Santos isn’t concerned: “The operators most exposed are those whose only mid-term offer is a discounted nightly rate on a basic unit,” Santos says. “The guests taking our monthly stays are paying for something different, a furnished and serviced home they can book for one month and then extend or leave.”

Santos also argues that short-term demand will return: “We do not see the future of this industry as mid-term living. As tourism recovers, short stays will be the largest share again, with monthly stays keeping a bigger share than before because the habit has now been created,” he says.

Where is the next check-in

The Dubai market is not structurally oversupplied yet, but pockets of excess inventory could emerge where supply outpaces demand, warns Sajjad. The signs: falling occupancy and ADR, weaker RevPAR, longer booking lead times, heavier discounting, and more properties returning to the annual rental market.

That risk isn't spread evenly. The fastest supply growth is concentrated in lower-entry-price areas — JVC, Dubai Creek Harbour, Meydan/MBR City, and Dubai Hills — where investors are chasing a better ratio between acquisition cost and achievable rental income, Sajjad says. Established neighborhoods look more insulated: Downtown Dubai, Dubai Marina, JBR, and Palm Jumeirah have enduring demand drivers — beaches, landmarks, restaurants, walkability — and supply there is largely built out. “The reason to stay there does not change... it will not move much either,” Sajjad says.