The impact of tourism growth on Dubai’s property sector

Dubai’s real estate market has always been closely linked to its booming tourism industry. As one of the most visited cities in the world, Dubai attracts millions of international travellers annually; visitors who not only boost the hospitality sector, but increasingly influence property demand, rental yields, and investor appetite.

In recent years, the emirate’s tourism performance has not only recovered from pandemic-era disruptions but exceeded expectations. In 2023, Dubai welcomed more than 17 million international visitors, and tourism revenues hit record highs. This resurgence is now feeding directly into real estate, particularly in short-term rentals, second-home purchases, and luxury investment.

Short-term rentals: demand outpaces supply

The rise of platforms like Airbnb and Dubai’s investor-friendly regulations around holiday homes have created a thriving short-term rental market. Popular tourist zones—such as Downtown Dubai, Dubai Marina, Palm Jumeirah, and JBR—see consistent demand from visitors seeking serviced apartments and resort-style stays.

“Tourism has redefined the rental landscape,” says Dean Charter, COO of Paragon Properties. “Properties once marketed as long-term investments are now being repositioned as income-generating holiday homes. And the returns, in some areas, can be significantly higher.”

Gross yields for short-term rentals in high-tourism zones can reach 10–12%, compared to the 5–8% typical in the long-term market. This is particularly appealing to international investors who want both a personal holiday base and a high-performing asset.

Second-home buyers and lifestyle migrants

Many of Dubai’s repeat visitors have transitioned from tourists to property owners. The city’s combination of luxury living, safety, zero property tax, and visa-friendly policies has fuelled demand from high-net-worth individuals and remote workers alike.

Developments near leisure attractions—such as Bluewaters Island, Dubai Hills Mall, and Expo City—are especially popular among second-home buyers looking to combine vacation with long-term value.

“Dubai sells itself once people experience it,” says Charter. “A week in a serviced beachfront apartment often turns into a conversation about ownership—and that’s fuelling a lot of off-plan interest.”

Luxury property and branded residences

Dubai’s luxury property market has been a direct beneficiary of tourism growth. Iconic locations like the Palm Jumeirah and Jumeirah Bay Island attract high-spending tourists who later return as buyers. Branded residences tied to five-star hotels—such as The Address, One&Only, and Dorchester Collection—offer seamless transitions between hospitality and homeownership.

Buyers in this segment are often motivated by lifestyle as much as return. These properties are designed to appeal to global elites accustomed to premium service, privacy, and exclusivity.

Tourism and capital appreciation

The impact of tourism isn’t limited to rentals. Areas with consistently high tourist footfall tend to outperform in capital appreciation over time. Proximity to beaches, retail hubs, cultural attractions, and airports enhances long-term demand.

Locations such as Business Bay, Dubai Creek Harbour, and the surrounding Expo 2020 legacy districts are expected to benefit from ongoing tourism infrastructure investment—including museums, marinas, and luxury resorts.

“Tourism growth drives foot traffic, brand exposure, and lifestyle desirability,” says Charter. “That’s what converts neighbourhoods into investment hotspots.”

Risks and regulatory oversight

While tourism-driven investment has benefits, it comes with unique considerations. Short-term rental operators must be licensed, and compliance with local tourism and zoning laws is essential. Overdependence on tourism can also create volatility, particularly during economic downturns or geopolitical shifts.

The Dubai government has taken steps to regulate the holiday home sector and ensure quality standards—moves welcomed by investors focused on long-term sustainability.

Tourism is more than an economic pillar for Dubai—it’s a strategic engine for property growth. From short-term rentals to lifestyle migration, tourism fuels demand across price points and property types.

“Dubai is uniquely positioned where tourism and real estate genuinely reinforce each other,” Charter concludes. “As visitor numbers grow, so too does investor interest—and that’s a virtuous cycle for the market.”