(MENAFN- Khaleej Times)

An increasing number of landlords and property owners in Dubai are converting their units into holiday homes in response to damage caused by illegal partitioning and costly structural alterations by tenants.

In June, the Dubai Municipality and Dubai Land Department launched a crackdown on unauthorised partitions , particularly in areas like Al Rigga, Al Muraqqabat, Al Satwa, and Al Raffa, citing serious safety concerns. As a result, some landlords have spent as much as Dh45,000 to remove illegal modifications made by tenants.

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“We've seen more owners, especially in Dubai Marina, switching to holiday homes after tenants illegally partitioned units or refused to vacate. For many, it's about control and peace of mind, not just profit. With holiday homes, you keep possession, avoid eviction headaches, and your property stays in better condition - something long-term tenants can't always guarantee,” said Shilpa V Mahtani, co-founder and CEO of bnbme holiday homes.

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Rohit Bachani, co-founder of Merlin Real Estate, confirmed the trend, noting a clear shift among landlords toward holiday homes or serviced apartments.

“Since the recent enforcement drive against illegal subletting and partitioning, we've seen more landlords choosing professional holiday-home management or converting to serviced apartments. The logic is control. With Dubai Department of Economy & Tourism's permits and professional operators, owner access is easier, guest numbers are monitored, and there's far less risk of a tenant quietly carving up a unit,” said Bachani.

Advantages

According to Bachani, the increase in holiday home conversions is especially evident in areas like Downtown, Dubai Marina, and the Creek corridor, where daily and weekly bookings are strong and regulatory compliance is straightforward.

He outlined three primary advantages of using properties as holiday homes rather than renting them out long-term to tenants who might sublet:

“First, compliance and control. Holiday homes sit under Dubai's permit framework with inspections and clear guest limits, which naturally shuts the door on partitioning. Secondly, professional operators give owners live calendars, ID-verified bookings, and housekeeping logs, which you never get with a risky subletting tenant. Thirdly, regular cleans and check-out inspections keep units in better condition than a long let that's been informally sublet to five or six unrelated occupants.”

Higher returns

Humaira Vaqqas, a property consultant at Range International Properties, noted that some landlords have transitioned to holiday homes or serviced apartments to maintain cash flow.

“Facing financial strain, landlords who relied on partitioned rentals for higher returns may be struggling with reduced income until they find compliant tenants. It will have an impact on the real estate sector to grow more positively,” Humaira added.

Commenting on profitability, Bachani explained that while gross revenue from holiday homes can be higher in tourist-driven areas - especially during peak seasons - the actual net return depends on several factors.

“Net returns depend on occupancy, operator fees, utilities, and furnishing. In Downtown, Marina, Palm, and Creek Harbour, well-run holiday homes can outperform a standard annual lease on a like-for-like unit, but the spread narrows once you add costs. In purely residential sub-markets with modest tourist demand, a steady annual lease to a family can still be the better net outcome. It's market-by-market and operator-by-operator,” he said.

Shilpa added that over a three-year period, a well-managed holiday home often delivers better returns - even with today's elevated rents.

“Especially if the operator isn't reliant solely on online travel agents and has alternative strategies,” she noted.

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