According to industry leaders, some real estate properties in Dubai may shift from being designated as vacation homes to co-living accommodations due to the city's new legislation; however, a reverse process is unlikely.
Luis Santos, co-founder of First Class Property Management, noted that movement is occurring only in one direction, with almost none in the other. He explained that vacation homes are most effective in areas such as Downtown, Marina, Business Bay, and JBR, where units are furnished to a specific standard, have a nightly rate, and are booked by tourists and residents between properties.
Co-living, he said, suits larger apartments in older or peripheral zones, offered at a per-room rate for budget-conscious residents. Santos added that owners of villas and large apartments in areas with weakening holiday demand now have a clear legal option to transition, which is a sensible decision for them and helps maintain the market appeal of remaining properties.
Co-living in Dubai is facing stricter regulations: over 44 zones have been approved for this type of accommodation. The Dubai Municipality has established requirements for minimum space, safety, and amenities, and landlords must obtain permits and adhere to occupancy rules. These measures aim to prevent overcrowding and protect tenant rights.
Co-living is permitted in 28 communities, including Al Ras, Al Dhaia (Deira), Al Bateen, Naif, Al Rigga, Al Mutena, Al Murakkabat, Khor Al Anz, Al Rashidiya, Al Nahda 1, Al Qusais, Al Twar 5, Al Nahda 2, Muhaisnah 4, Karama, Oud Metha, Jumeirah 1, Al Barsha 1, and Al Warka 1, among others. In other areas, co-living is only allowed in specially designated parts of the community, such as Abu Hail, Al Baraha, Al Hamriya, Mankhool, Al Jafiliya, Al Hudaybiyah, Al Satwa, Port Said, Khor Al Anz East, Al Mamzar, and Al Qusais Industrial Zones 1, 2, 3, 4, and 5.
Santos ruled out the possibility of a reverse transition because a vacation home must be rented out entirely as a furnished and classified property. Thus, 'the two markets are separated more clearly, and each property ends up in the use that best suits it.'
Shilpa Mahtani, co-founder and Managing Director of bnb holiday homes, agreed that these two models are not interchangeable. She noted that some shifting is possible depending on location, demand, and profitability.
Dubai Law No. 4 of 2026 requires obtaining a permit before any property can be designated for co-living. It also regulates the occupancy and management of such properties. The law came into effect at the end of August, giving owners and operators already managing co-living properties one year to comply with the requirements. The Dubai Municipality oversees co-living, while the Dubai Land Department maintains an electronic registry of approved properties, leases, and residents.
Santos stated that the direct impact on vacation homes will be 'very small' because they fall under a separate regime. A vacation home is a fully furnished property rented for less than six months with DET permission. Co-living covers rooms and beds for residents under long-term contracts and requires municipal approval, an approved occupancy limit, and a lease registered with the land department. Repeated violations can result in fines of up to 1 million dirhams.
In his view, the real effect affects the informal market between these two segments. Mahtani believes that the new rules 'will help create a more structured and transparent housing market.'
Vacation homes cater to tourists, families, and corporate travelers who value privacy and hospitality services, whereas co-living meets the need for affordable long-term accommodation. Neither leader expects the new law to significantly change rates for vacation homes, as the clientele of these segments differs.
Santos emphasized that a family visiting Dubai or a specialist relocating for three months does not choose between a vacation home and a bed space. If there is any influence, it is supportive, as short trip budgets are now regulated and registered.
Mahtani added that prices mainly depend on tourist demand, seasonality, events, and location, and any impact is likely to be 'localized rather than affecting the entire market overall.' According to the First Class UAE Short-Term Rental Index, bookings made for winter by October 1st were 12 percent more expensive in October, 19 percent in November, and 18 percent in December compared to the previous year.
Santos concluded that the co-living law 'is good for Dubai and good for our industry.' Annual contracts are registered through Ejari, vacation homes fall under DET, and co-living is monitored by the Dubai Municipality with contract registration at the land department. This helps owners choose the appropriate use for each property and supports professional operators.
He pointed out one area requiring attention—advertising. According to Santos, the law prohibits promoting co-living without a permit, and booking platforms are already verifying permit numbers for vacation homes, so a room rented without a permit 'should not be able to be displayed as a vacation home.'
Santos suggested that with the year provided to bring existing properties into compliance, market cleansing should be reflected in figures by 2027. Mahtani concluded that Dubai's strength lies in offering diverse accommodation options for different needs, stressing that 'vacation homes offer a hospitality experience, not just a place to stay.'