Dubai is one of the most lucrative places to invest in real estate. In fact, the city has one of the highest ROI in the world. Additionally, what makes it more attractive is the zero income tax on individual ownership. For properties owned by companies, taxes will only apply if the income is more than AED 375k.  

Accordingly, this is why rental properties in Dubai offer an excellent opportunity to make money. It is considered a low risk investment opportunity with high rental yield potential. Plus, it can even be a profitable passive income if you partner with a trusted property management company. 

At 5.75% gross rental yield in Q2 2024 alone, you can benefit from the thriving rental market in Dubai and start earning money from rental property Dubai. Overall, you have three main options if you want to make money through rental properties in Dubai. These are long-term lease, short-term lease, and joining a hotel rental pool. 

Let’s discuss these three options in detail.

Long-Term Lease

A long-term lease is a common and stable way to earn rental income in Dubai. As per Dubai’s law, only UAE residents and legal entities can rent these properties. Moreover, the minimum lease term is at least a year. Any rental property Dubai that falls below those terms will be considered a short-term rental.

Additionally, rental increases must follow the RERA rent index, which calculates acceptable increases depending on the market rates in the area. Following RERA guidelines, rental increases typically don’t exceed 5% yearly. 

RERA Tenancy Law

It is important to note that the contract between tenants and landlords are maintained and governed by Law No. 26 of 2007, or the Dubai Tenancy Law. 

Moreover, registering the rental contract with Ejari is a legal requirement under this law. Additionally, the process is an initiative of the Real Estate Regulatory Agency (RERA) in Dubai. Its main purpose is to formalize rental agreements between the tenants and landlord. 

As much as you will be concerned with the registration process of rental property Dubai, termination of contracts is just as important. For early termination of rental property Dubai, some things to keep in mind are:

• The decision for an early termination of contract should be mutual and not unilateral (unless specified in their agreement).
• Lease agreements remain valid until the end of the contract period, even if the landlord or tenant passes away.
• All obligations of the landlord or tenant (once deceased) will be passed on to the heir.

Short-Term Lease

Short-term rentals, on the other hand, is the second way to make money through rental properties in Dubai. It caters to the growing tourism and immigrants in Dubai. In our data, you can even earn from 10% to 20% ROI with short-term lease compared to long-term. In addition, if you own a property especially in prime locations, you can directly rent this out to tourists. You can also opt to partner with platforms to list your properties online. 

Requirements for Short-Term Rentals 

Consequently, in order to pursue short-term rentals, landlords need a permit from the Department of Tourism and Commerce Marketing (DTCM), renewable every year, and with a maximum of 8 units.

There are associated obligations you need to take note of:

• You need to pay AED 1,500 property license fee every year.
• Landlords are required to pay AED 10 to AED 20 as tourism fee for every night the guests stay in the property.
• DTCM must be informed of the guests arrival and their details within 24 hours.

Additionally, short term rentals will also require the landlord to set up a bank account, partner with platforms to advertise the property, and handle daily operations such as bookings.

Hotel Rental Pool

Another interesting way to make money through rental properties in Dubai is through a hotel rental pool. As it is a new way of renting out property in Dubai, it needs more elucidation as to how it works.

Generally, developers would sell branded residential units to investors. These units are often off-plan properties. Then, the residential units are leased back to the hotel to allow the hotel operators to rent them out to guests. The investors would earn a share of rental income Dubai while having a hotel manage their property.

Considerations of Hotel Pool Rentals

• You will have a guaranteed ROI and less risks involved.
• An experienced hotel operator will take care of everything for you.
• You will only receive a portion of the revenue with operational costs and management fee deducted already.

How Much Rental Income Can You Expect?

The rental income Dubai is more competitive compared to global markets like New York at 6% returns on average. In Dubai, the returns typically start from 5% to 10% annually. However, these numbers can even reach great heights depending on the property’s location, type, and costs. 

For instance, greater returns are generally found in prime locations like business districts, near tourist hotspots, and popular residential areas. Hence, renting out property in Dubai within these areas has consistently high rental rates.

Additionally, short-term rentals can even have up to 15% to 20% ROI if you partner with a reliable property management company. 

Different Types of Rental Property Dubai

The general rental property in Dubai is divided into residential and commercial properties. Moreover, these different properties all answer to different guidelines, regulations, and varying ways of marketing. This is why the most recommended move for landlords when they’re renting out property in Dubai is to partner with a property management company. APIL Properties, for example, specializes in all three options. We have a tailored management solution for long-term lease, short-term, and hotel pool. 

Residential Rental Properties 

For residential properties like apartments, villas, townhouses, and more, landlords can put them up for long-term or short-term leases. On the other hand, branded residential units in a hotel rental pool are offered mainly for short-term stays.

Commercial Rental Properties

Meanwhile, commercial properties are typically leased to businesses on long-term contracts. The lease contracts for this type of property are more flexible than residential properties. In fact, the duration of commercial property lease typically ranges from 1 to 5 years.

Conclusion 

Knowing how to make money with rental properties in Dubai will guarantee your success and long-term gains. While the process can be daunting, especially for first-time landlords, APIL Properties has an experienced team you can rely on.

We have a deep understanding of what the landlords need to know before jumping into this journey. In addition, we can guide you through the needed legal requirements and intricacies you need to understand. With only a 15% management fee, you are already adding value to your properties. Our client-centric approach can provide you with personalized advice and services on how to make money through rental properties in Dubai. 

FAQs

Is renting out property in Dubai a good idea?

Yes. Rental property Dubai are low risk investments with guaranteed high returns.

How can you make money with rental properties?

You have three options on how to make money through rental properties in Dubai. This is through long-term leases, short-term leases, and hotel rental pooling.

Can non-residents rent out their properties in Dubai?

Yes. Non residents can make money by renting our property in Dubai, but they will need a local bank account to receive rental payments.

What legal requirements do you need for rental property Dubai?

To formalize your rental agreements, you need to register them with the Ejari system, which is backed by RERA. This will give you legal protection should there be disputes between properties. 

What are the costs of renting out property in Dubai?

The associated costs for rental properties in Dubai are maintenance costs and service fees. Dubai does not have a rental income tax, so landlords can enjoy most of their profits.

How much rental income can you expect from real estate Dubai?

Landlords can typically earn a 5% to 10% ROI on average for rental property Dubai. However, with property management, short-term rentals can even reach 15% to 20% yearly.