Emaar Properties warns owners against holiday rentals

An article in yesterday’s Gulf News sends a warning to overseas property investors who have invested in any Emaar developments in Dubai. Emaar has warned owners in their developments who are letting out their properties on a short-term basis for less than 6 months to holiday makers is a violation of contract and action could be taken against them.

Under the contractual terms owners signed up to when purchasing an Emaar developments and which many residents believe are unclear, short-term lets of Emaar properties is a violation of contract and Emaar has warned grounds for disciplinary action against homeowners in Emaar projects. According to Emaar, although there is no mention of short-term rentals in the contracts, “the same is implied by the clause: ‘is for single family residential purposes only”.

“Short-term contracts are typically used as holiday lets, for which a trade licence must be obtained from the appropriate authority,” said the spokesperson. “Emaar’s communities are private gated communities and have not been designed or equipped to be used for commercial purposes. Safety and security is paramount at Emaar’s communities and we believe that unapproved activities put a strain on the system.”

As part of its investigation the Gulf News poising as a potential buyer questioned an Emaar sales agent as to whether this restriction exists and was told that the developer had no restrictions on how long a homeowner could let the unit for, and did not object to short-term lets. When asked for comment on the matter, the Emaar spokesperson responded saying, “Emaar sales agents do not make such comments as they are aware of the rules and regulations governing the use of our properties.” When Gulf News recontacted the agent, it was informed that there was no clear policy on short-term rentals.

“We don’t allow it but we can’t control it either.” commented Emaar’s spokesperson for Emaar yesterday, “Homeowners cannot let out their properties for less than six months as it is considered a “commercial” activity and requires a trade licence. Emaar said it has already “taken action” on one such homeowner renting to holidaymakers. “We respect the privacy of our homeowners and approach this matter with sensitivity. However, when such activities and related disturbances are reported to us, we take appropriate action,” continued the spokesperson.

The Rise of Dubai Rentals

Owners of villas in developments such as Arabian Ranches have reported receiving warnings of action from Emaar if they do not cease holiday rentals. This news comes as a huge blow to Dubai property owners who selected an Emaar project as their investment with many overseas property owners buying their apartment or villa as a second home but with a view to renting the property to friends and work colleagues to cover the property’s maintenance costs. Homeowners and real estate agencies say they have not been made aware of this and that a clear policy on the issue is lacking and many are of the feeling that if they had been made aware of this when they were buying an Emaar property, they would not have gone ahead with the purchase. Unlike Emaar, Dubai’s largest real estate developer, Nakheel, imposes no such conditions on homeowners in its residential projects however running a businesses from your Nakheel home is prohibited, short-term renting is permitted.

On the back of Dubai’s property boom, a number of real estate agencies have diversified into a short-term rentals management service and several internet-based rental agencies are also in operation with a view to targeting potential tourists from abroad seeking home from home accommodation. A large number of the properties listed on Dubai holiday home websites and under the care of real estate agencies are located in Emaar residential projects.

Naturally, holiday lets are more lucrative than annual or the stipulated 6 month contracts, short-term rentals manager, Tatyana Dreis at Dubai-based Better Homes real estate agency, believes homeowners could potentially make on average “10 to 20 per cent” more on short-term rentals. Better Homes had faced “no obstacles” so far, began accepting units for rental on a short term basis 2 years ago and from just 15 properties, today has an inventory of 130. Dreis said, however, that her agency.

Holiday lets in favour of Dubai hotels

Dubai is steadily becoming a mainstream international travel destination further substantiated by news today that Dubai national airline Emirates has ordered an additional A380 superjumbos to add 55 more aircraft to its fleet further increase its international capacity in response to growing passenger demand.

At present Dubai’s visitors stay on average 3 or 4 nights within which time, you can sample most of Dubai’s main tourism offerings from the souks, to desert rallying and its mammoth shopping malls. Within five years, however, Dubai is widely expected to go head-to-head in the multi-billion dollar short-term leisure market to compete for the lucrative family market aiming to lure the 2.4 unit away from some of the world’s biggest attractions such as US-based Orlando to theme parks such as the hotly awaited Dubailand.

“Families are attracted to self-catering accommodation as it gives them more flexibility when it comes to food and sleeping arrangements plus overall it is a much cheaper option than staying in a hotel for 2 weeks.” comments Chintan Mahida from Nubricks.com “so this issue is a huge blow for families wishing to rent property in an Emaar development.

Based on current occupation figures from Department of Tourism and Commerce Marketing (DTCM) which showed the numbers of hotel guests in Dubai rose 3.27 per cent last year, reaching 6.3 million compared to 6.1 million recorded in 2005, Dubai need between 80,000 to 100,000 hotels rooms to reach its ambitious goal of attracting 15 million foreign visitors by 2010. The emirate hopes to attract 6.8 million tourists in 2007 and DTCM statistics for the third quarter showed the hotel room inventory stood at 31,041, this shortage could easily be rectified through short-term letting and villas or apartments could contribute up to 20% of Dubai’s accommodation provision.

Emaar needs to be very clear about this issue in particular as June 23 sees Emaar Properties launches yet another luxury water-front project in Dubai. The 38-storey Dubai Marina Mall Hotel and Serviced Residences go on sale on June 23 with limited online registration. Part of the 150,000 sq m Dubai Marina Mall complex, a modern shopping and entertainment destination these 442 luxury, waterfront serviced apartment suites will be managed by the Emaar-approved hospitality operator that also manages the 5-star hotel and are aimed at the increasing numbers of business visitors to Dubai’s shores within longer term accommodation needs.

Source: Gulf News

What do you think? Do you think owners of Emaar Properties should be allowed to rent their properties out as vacation property? How should Emaar respond to this issue? Given that other developers such as Nakheel do not place this restriction on their owners, would you purchase with them in favour of Emaar? Have your say below.