Regional luxury holiday-home market on the rise

DUBAI: When Vinayak Mahtani’s sea view apartment on the Palm Jumeirah, Dubai, was completely trashed and deserted by a tenant, he was crushed. He had inherited the apartment from his father and had sentimental value attached to it.

After he and his wife renovated it and listed it on Airbnb to try short-term rental in 2015, he was shocked to discover he could make double his rental income in one year. After that, his friends and family began to offer their properties for short-term rental, leading Mahtani to officially register his holiday-home business, Bnbme, in 2018. Today, Bnbme operates nearly 150 properties across the UAE and 20 in India, with plans to expand into Saudi Arabia.

“We are selective with the properties we offer guests because they expect a luxury experience, so we will look at a potential villa, assess snags, let our designers spruce it up and upgrade it, then we manage it for an agreed period of time,” Mahtani explained in an interview with Arab News.

“We aren’t looking to have thousands of properties and become the biggest holiday-home provider in the Middle East. We refuse more properties than we take on because we want to maintain a brand standard.”

Changing travel trends

Mahtani, who has worked in the hospitality industry since 2005, is on to a big shift in consumer preferences. 

The global vacation rental market is projected to pass $111.2 billion by 2030, according to a Precedence Research study in late 2021. Moreover, short-term rentals weathered the pandemic better than hotels in 27 markets, according to a joint report by leading accommodation data providers, STR and AirDNA, last year.

The change in consumer habits is apparent because travelers preferred to rent apartments or villas rather than stay in small hotel rooms, particularly for families during lockdowns in major cities. Since then, the holiday-home market has witnessed a global spike in demand that has not shown signs of stopping.

From January to April 2022, Bnbme saw a 118 percent increase in revenue and a 76 percent increase in bookings. Top markets this year include Saudi Arabia, the UK, Russia, France, and the UAE.

“When the lockdown first happened in March 2020, hotel general managers called to ask if their guests could rent our apartments because they needed extra space or longer stays,” said Mahtani. “So, when the pandemic hit, we panicked and filled our entire inventory with guests who paid lower than usual rates, but it kept us going for the tricky six months that followed. We didn’t let any of our staff go.”

Dubai’s pandemic support

After that, Dubai’s masterful handling of COVID-19 measures made the city a welcoming, easy place to live, particularly for digital nomads and families during the pandemic.

As a result, Bnbme witnessed a boom during the pandemic that led to higher occupancy rates. This growth is part of a luxury-housing boom that Dubai has seen over the last two years. According to Knight Frank, a real estate consultancy, luxury home prices rose at the fastest rate in 2021, with Dubai leading at 44 percent in a year.

“In the post-COVID-19 landscape, ultra-high-net-worth buyers visited Dubai in huge numbers,” said Andrew Cummings, head of prime residential at Knight Frank Middle East.

“To add to this, at the top end of the market, quality is now the watchword with developers building super-prime properties to cater to the demands of the global elite who, over the last year, have shown themselves eager to own homes in Dubai.”

A comprehensive 2019 Knight Frank report showed that Dubai’s holiday-home market accounts for 2 percent of Dubai’s total households, the highest proportion of all other critical global hub cities.

Saudi Arabia plans

Bnbme is planning to expand into Saudi Arabia in 2023, starting with seaside villas in Dammam and spacious apartments in Makkah. The company hopes to build on luxurious standards beyond the actual properties; services include luxury car pickups from the airport, celebrity chefs for private hire, sheesha services at home, and organic toiletries from Europe.

“We wanted guests to stay in a property that had all the luxury resort facilities with comforts of home,” said Mahtani. “What’s better than flying first class? Flying with a private jet. That’s similar to what we are trying to do with accommodation.”