A Dubai hostel business has been shut down after its sleep-pod dormitories were found to be in breach of multiple occupancy housing regulations.
The owners of Next House hostels operated six centres in residential buildings in Business Bay, Jumeirah Beach Residence and Dubai Marina.
All have now been closed after complaints from neighbours and a Dubai Municipality investigation that found the business was operating outside tourism licence limitations.
“As the government doesn't have licensing for hostels in residential buildings, we’ve had to close down all our operations," said Rayan Hanna, chief executive and founder of Next House hostels.
“We learnt very quickly you are only allowed to rent the unit as a whole, not per room, not per bed.
“Within six months of operations, the government gave us a call and told us to close the properties.”
The accommodation offered a dormitory and communal living space, a kitchen, an outdoor jacuzzi, pool tables and games consoles.
Each had capacity for up to 26 guests, and a 24-hour check-in option, with a total of 178 beds spread across different city locations. Rates started from Dh60 per night.
Mr Hanna used a holiday home licence to run the business, but was later told this did not apply to hostels, which require their own designated building to operate from, similar to a hotel.
His investment of about Dh1.5 million has been lost, but Mr Hanna is now working with authorities to comply with tourism regulations to resurrect the business.
The issue of multiple occupancy was brought into focus following the recent fire in Tiger Tower in Dubai Marina, that forced the evacuation of more than 3,800 residents.
Some tenants told how they had lived in partitioned apartments close to work to save on accommodation and transport costs.
There is high demand for affordable residency and hostel options are proving popular, particularly given Dubai's tourism sector is booming.
Numerous hostel listings for Dubai and other parts of the UAE are readily available online, with one offering 18 rooms in a two-bedroom apartment.
Next House's website promised a cut-price stay in some of Dubai’s most desirable neighbourhoods, albeit in the limited surroundings of a capsule bed with a privacy curtain in a shared room with several other guests.
However, those living next door to the Business Bay Central Hostel said the revolving door of guests, and constant use of communal lift and building services had become a nuisance.
“I went from having the perfect neighbours to not knowing who was living there one week to the next,” said Mamta Varerkar, who owns an apartment next door with her husband, nanny and young daughter.
“I met the owners, but they never said it was going to operate as a holiday home. I was very surprised and upset.
“The apartment has three bedrooms and they had set up the rooms in such a way that they could allow 26 guest at a time, which is a lot.
“In our building, there are posters everywhere saying the community is for family occupancy only, with no sharing allowed.”
Leila Talibova lives with her husband and two children at Executive Towers, on a floor where one of the hostels was run.
She contacted local authorities to understand the rules around operating hostels.
“When someone rang our doorbell at 10pm asking if our place was the hostel, it was the first we knew about what was happening,” she said.
“When we were looking to buy an apartment, we wanted a building that was family orientated with no sharing allowed.
“We were quite shocked to find a hostel had opened up on our floor.”
To maintain safety and living standards, Dubai Municipality regulates multiple occupancy accommodation with frequent inspections.
Rules state each person must have a minimum area of five square metres of living space, with subletting or shared accommodation without written landlord consent prohibited.
Landlords and tenants found operating overcrowded apartments can be fined Dh10,000 per violation. Next House was not fined as it immediately shut down operations on request.
Overcrowding can create safety hazards, with poor hygiene and ventilation, as well as blocked emergency exits.
Mario Volpi, head of brokerage at Novvi Properties, has 40 years of experience in London and Dubai real estate and said there is good reason for regulations against hostels being allowed to operate in residential buildings.
“A client will come and view the property they’re hoping to buy, to see if it's fit for their requirements," he said.
“But they don't just look at the actual apartment, they're looking at the facilities, the common areas and how the building is being run.
“All these things have a factor on a possible sale, and the value. A hostel would 100 per cent have an effect on the majority of people living nearby.”
Shilpa Mahtani, co-founder and managing director of bnbme holiday homes by Hoteliers, said demand for affordable accommodation is being driven by more younger people travelling to Dubai.
“We expect the short-term rental industry to rise by 18 per cent in 2025.
“This industry has experienced huge growth post-pandemic and we expect this to continue expanding driven by factors like increasing global travel, tech advancements and growing preference for personalised and sustainable experiences.”
