The Promise of High Returns
If you’ve walked through Dubai Marina or Downtown lately, you’ve probably noticed how many apartments are being run as holiday homes. It’s no surprise—Dubai welcomed over 17 million visitors in 2023, and tourists are hungry for Airbnb-style stays instead of traditional hotels. For landlords, this looks like an easy win. A one-bedroom in Marina might earn between 6 to 12 percent annual yield, which is almost double what a long-term lease would bring. On the surface, it feels like the property equivalent of striking gold. But if you scratch a little deeper, you’ll see that the shine comes with serious conditions.
Dubai: The Opportunity with Strings Attached
Dubai has built one of the most advanced holiday home markets in the world, but it doesn’t let anyone play without rules. You can’t just throw your apartment on Airbnb. A licence is required, and you can only register up to eight properties under your name. If your unit sits in a managed community like the Palm, you also need a No-Objection Certificate from the developer. And forget about skipping insurance—landlords are expected to cover guest damages. Many owners only discover these rules when they get hit with fines or find their property delisted from platforms.
Abu Dhabi: A Stricter Playing Field
The capital takes things even further. You can’t rent out a spare bedroom; only entire units are permitted. Every month, you must submit reports of your revenue and occupancy to the authorities. On top of that, a 6 percent tourism fee and VAT apply. The legal risk here is real—non-compliance can cost up to AED 100,000 in fines. For many small landlords, that’s a penalty that wipes out years of income.
Sharjah: A Closed Door for Individuals
Sharjah is even less forgiving. Individuals simply aren’t allowed to operate short-term rentals. The only way to get into the market is through a registered company. For an investor who thought they could casually list their flat, Sharjah makes it clear: short-term rentals are a business, not a side hustle.
The Reality of Running It
And that’s the heart of it. Holiday homes aren’t passive income streams; they are mini-hotels. Guests expect spotless check-ins, clean linen, and quick responses to problems. Occupancy swings with seasons—during Expo or COP28, apartments are full, but quieter months can leave units half empty. Many landlords give up and hire management companies to handle everything, but that means losing 15 to 25 percent of their gross income in fees. What started as a 12 percent yield can quickly fall to something closer to a normal long-term lease.
The Hidden Advantage of Regulation
Here’s the part most people miss: regulation is not just about handing out fines. It’s also what keeps the holiday home market in the UAE safe, fair, and trusted. When a tourist books a flat in Dubai Marina, they know it’s licensed and inspected by the government. That peace of mind is what makes Dubai stand out against cities where short stays are still a grey area.
So if you’re serious about holiday homes, the checklist is simple: get your licence, secure your NOC, keep your insurance in place, file your reports, and pay your fees. Do it right, and you’ll enjoy steady returns and protection from disputes with neighbours, developers, or even your own guests. Skip the process, and you’re exposed to risks that can turn a profitable unit into a legal headache overnight.
What these rules really do is separate the serious players from the casual ones. The people who treat holiday homes as a real business—like running a mini-hotel—end up thriving. Those looking for easy money usually don’t last. And that’s the hidden advantage of regulation: it cleans up the market, protects the city’s reputation, and rewards the investors who are willing to play by the rules.
The Critical Question
So the big question is: is it still worth it? For someone who wants quick and easy money, the short-term rental market in the UAE has become a minefield. The risks of fines, penalties, and low occupancy are too high. But for investors who are ready to navigate the legal maze, hire the right teams, and accept that holiday homes are hospitality businesses, not passive properties, the goldmine is still very real.
Final Thought
The truth is, short-term rentals in the UAE are not what they were ten years ago. The market has matured. The easy money is gone. What’s left is a serious industry where success belongs to those who understand both the law and the business. The goldmine is still there—but it demands more than capital. It demands compliance, patience, and the mindset of a hotelier.
Written by Mohamed Darwish
Founder of Darwish Legal Consultants Hospitality & Real Estate Lawyer | Certified Mediator (IMI, ADR Center & Dubai Legal Affairs Department) | Author of “The Art of Mediation: The Key to Resolving Disputes in the Hospitality Industry” and “AI for Lawyers : A Practical Guide” | Host of The Legal Lobby Podcast
