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Dubai short-term rentals show resilience as longer stays support market
Dubai’s short-term rental sector adjusted to softer tourism demand in Q2 2026, with extended-stay bookings, strong yields and new infrastructure projects supporting longer-term growth
- PUBLISHED: Wed 29 Jul 2026, 10:00 AM
Dubai’s short-term rental market demonstrated resilience in the second quarter of 2026, with operators successfully adapting to changing travel patterns through longer stays and flexible accommodation offerings, despite a temporary slowdown in tourism demand.
According to the inaugural UAE Short-Term Rental Index by First Class Property Management, Dubai’s short-term rental market ended the quarter with 33,795 active listings, 10.2 per cent higher than a year earlier, underlining the sector’s continued expansion and investor interest. While occupancy and revenue metrics softened compared with the exceptionally strong levels seen in 2025, the report suggests the market is undergoing a cyclical adjustment rather than a structural decline.
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A key trend emerging from the quarter was the growing importance of extended stays. Average length of stay across the market increased to six nights from five nights a year earlier, while nearly 70 per cent of nights booked within the First Class portfolio came from reservations lasting 29 nights or longer. Researchers noted that longer-stay demand has become an important stabilising force, helping operators maintain occupancy and revenue visibility amid evolving travel patterns.
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The shift is particularly evident among professionally managed properties. The First Class portfolio recorded occupancy of 87 per cent, significantly outperforming the broader market and highlighting the growing value of active revenue management, flexible pricing and a focus on longer-duration guests.
Dubai’s appeal as a global destination also continued to support demand fundamentals. The emirate welcomed a record 19.59 million international overnight visitors in 2025, while visitor numbers during January 2026 remained 3 per cent higher than a year earlier, according to the latest official tourism data cited in the report.
The market’s supply growth reflects confidence in the long-term outlook. Although listings have moderated from a January peak of 36,500 units, inventory remains well above year-ago levels. Dubai Marina continued to host the highest concentration of short-term rental listings, followed by Downtown Dubai and Jumeirah Village Circle, demonstrating the sustained popularity of established tourism and residential hubs.
Prime districts continued to command premium rates. Palm Jumeirah remained the most expensive short-term rental location in the city with an average daily rate of AED682, while Downtown Dubai posted one of the strongest occupancy rates at 59 per cent. Dubai Creek Harbour emerged as another standout performer, achieving occupancy of 66 per cent, reflecting growing interest in newer waterfront communities.
For property investors, the economics of short-term rentals remained compelling. Across comparable one-bedroom units, short-term rental gross yields averaged 7.2 per cent, compared with 5.2 per cent for long-term rentals. High-performing locations such as JVC, Dubai Production City and Dubai Creek Harbour generated some of the largest yield premiums, reinforcing the attractiveness of holiday-home investments.
Looking ahead, the report identifies a pipeline of major tourism and infrastructure developments that could support future demand. These include the expansion of Al Maktoum International Airport, progress on the Dubai Metro Blue Line, the Dubai South HAYAT development, and large-scale destination projects such as Sphere Abu Dhabi and the planned Disney resort on Yas Island. Together, these investments are expected to strengthen regional tourism flows and open new areas for short-term rental growth.
The report’s outlook remains constructive, with analysts expecting longer-stay bookings to remain a key source of stability while infrastructure-led growth corridors create fresh opportunities. As Dubai continues to invest in connectivity, tourism and new residential communities, the emirate’s short-term rental market appears well positioned to capitalise on the next phase of travel and population growth.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.