Holiday Homes in Transition: How Spain and Dubai vary in rules and opportunities

Regulations: Slowing Down in Spain, Accelerating in Dubai

In Spain, rules for short-term holiday rentals are becoming increasingly strict. In many regions, the number of permits is limited and a maximum number of rental days per year is imposed. Major cities such as Barcelona and Palma de Mallorca actively restrict the expansion of short-stay rentals to combat over-tourism. This often results in longer procedures, higher compliance costs, and more uncertainty for investors.

On the Balearic Islands, including Ibiza and Mallorca, regulations are even stricter. In some municipalities, the issuance of new tourist licenses has been temporarily halted, and existing licenses are closely monitored. This creates longer procedures, higher compliance costs, and increased uncertainty for investors.

Dubai takes the opposite approach. The government actively encourages professional short-stay rentals and makes the rules clear and predictable. With a valid DTCM license, investors can rent out properties as long as they meet the established standards. Regulations and fees are transparent and communicated in a timely manner, which provides confidence for foreign investors.

Returns and Market Potential

Spain remains a popular destination with large and stable tourism, but demand is often seasonal. Summer months see high occupancy and strong revenues, while winter months can experience lower demand. Stricter regulations and additional costs can put pressure on profit margins, especially in popular coastal areas.

Dubai, on the other hand, enjoys nearly year-round demand for short-stay accommodations, due to the combination of leisure tourists, business travelers, and international events. Areas such as Downtown Dubai and Dubai Marina attract a steady stream of visitors. With clear licensing and service fees upfront, investors can more easily calculate realistic returns.

Livability and Experience

In Spain, the focus is often on maintaining the quality of life for local residents. Complaints about crowding and noise create political pressure to limit the number of tourist properties, which can slow the growth of the rental market.

Dubai is designed differently. The city is built to accommodate large numbers of tourists and expatriates and is supported by modern infrastructure. This results in fewer conflicts between residents and visitors and allows room for continued growth.

What Investors Should Consider

Those considering investing in Spain or Dubai should carefully research local regulations and factor in all costs, such as taxes, permits, and maintenance, when calculating potential returns. Long-term planning is essential. Will you prioritize the regulated stability of Spain or the growth and scalability offered by Dubai?

In Dubai, it pays to operate professionally, as short-stay rentals are often managed at a hotel standard, which benefits both guest experience and profitability. Investors looking to spread risk may also consider investing in both markets to take advantage of different tourist seasons.

Conclusion

Spain emphasizes a balance between tourism and livability, which can lead to stricter rules and restrictions. Dubai focuses on growth and professionalization and offers investors a clear and predictable framework. For investors, the choice comes down to stability with sometimes lower margins or dynamism with potentially higher returns.