Small-sized studio housing has become increasingly popular with investors, both residents of the UAE and foreigners, in the last couple of years. This demand is especially high in Dubai.
Studios are a liquid product, they are well suited for rent and resale, they are possible in both affordable and elite configurations.
This offer is widely distributed geographically, offers one of the highest ROI indices among other types of real estate, and it is the studios that often have the right to own a freehold (unconditional and indefinite ownership of real estate).
Studios are suitable for investment due to several features, including a high rental income of 11% and a ROI of about 10%.
In this article, we will consider how studios are profitable and which areas are the most promising for investors in 2021.
We will also offer recommendations for buying high-quality and elite studios, investments in which will allow you to quickly recoup your investments and start making a profit.
The content of the article:
- Why it is profitable to invest in studios
- The best areas to buy studios in 2021
- Promising complexes for buying elite studios
Why it is profitable to invest in studios
Let's start with the main thing and indicate the reasons for the high benefits from deposits in this type of real estate.
The obvious reason is that studios are quite cheap and are suitable not only for investors with large capitals, but also with modest savings.
On the other hand, wealthy buyers can buy much more units of such housing, which differs from large analogues only in area.
At the same time, they will receive highly liquid residential real estate that can be profitably sold or rented out, since studios often have almost the same amenities and access to benefits that can be obtained when buying large apartments.
In other words, it is no less profitable to buy studios than large apartments and the only difference is the size of the living area.
This point directly follows from the previous one. One of the main items of expenditure for investors is not the price of the housing, but the need to maintain it, do repairs and re-equip it for many years of service.
The same applies to those to whom the investor is going to rent or sell housing. A wide customer base prefers to buy or rent studios, because it is cheap and easy to take care of it. Even if we are talking about the most luxurious offer on the market.
In addition, a small living space forces the developer to constantly develop and provide as ergonomic residential objects as possible, in which the available space is utilized with the greatest efficiency.
Low utility costs
Another important point is that one of the main items of utility costs does not relate to the maintenance of the object or garbage collection. The main item of expenditure is electricity.
And we believe that you can guess what the main funds are spent on air conditioning. The United Arab Emirates is a country with an incredibly hot climate, which, on the one hand, is worsen by dry desert winds, on the other hand, by ocean humidity.
In the city, it is easier to find a house that does not have air conditioning than one that has it. And we must understand that even the autumn-spring seasons are quite difficult to bear, especially for investors from countries with a temperate climate (Europe or America).
As a rule, in the summer, all utility costs, especially for electricity, increase in price.
For comparison, the median utility costs in the United States range from $250 to $400 per month, which is about $2,000 per year. In Dubai, rather modest calculations give $490 per month, which is almost $6,000 a year.
Thus, you can imagine what expenses you will have to pay for extra-sized and premium-class real estate. And all this is only in order not to suffer from high temperatures.
In view of all this, a small studio, indeed, has a more advantageous position.
High return on investment (ROI)
Studios are more often preferred by the three main groups of the Dubai population than other real estate objects: expats, tourists and foreign workers.
Someone needs temporary housing for work or vacation, someone has not yet decided on the desire to move to Dubai and wants to get the experience of living in the Emirate at relatively low prices.
Studios are a good compromise between staying in a hotel and renting an apartment. They are more comfortable and cozy than the first, and cheaper than the second.
The best areas to buy studios in 2021
We will consider the most popular areas for buying and renting studios with the highest ROI in Dubai.
In 2021, the market leaders were studios in Dubai Studio City, Al Warsan, The Greens, Barsha Heights and International City.
The return on investment in these areas took the range from 10 to 10.9% and showed the best rental income in the first half of this year.
Dubai Studio City
Developed by Dubai Holding, Dubai Studio City is a multifunctional free economic zone that combines a wide offer of both commercial and residential real estate.
This area is popular, first of all, with many film studios and radio and television broadcasting studios.
Residential facilities are located in a variety of high-rise buildings.
Dubai Studio City is located next to Dubai Motor City on the one side and with Arabian Ranches and Dubai Sports City on the other.
In other words, the area is located in the center between the largest car center, sports center and family villa area in the Emirate, which positively affects the influx of a diverse population and the demand for real estate.
There are many public leisure facilities on the territory of Dubai Studio City, including parks and swimming pools on the roofs of residential buildings.
With a ROI of almost 11%, the district provides a wide variety of studios in different price ranges. The cost of relatively cheap studios for sale is $73,500 and for rent — $9,500.
The premium offer is in the range of $130,000 - $150,000 and slightly higher.
Another multifunctional area, Al-Warsan, is located next to International City and is still under construction, but some areas of Al-Warsan have already been completed.
The district is divided into four main neighborhoods: Al-Warsan 1, Al-Warsan 2, Al-Warsan 3 and Al-Warsan 4.
Only townhouses are located in Al-Warsan 1. The residential districts of Al-Warsan 2 and Al-Warsan 3 are under construction. Therefore, from the point of view of selecting a good offer among the studios, we are primarily interested in the Al-Warsan 4 district.
Al-Warsan 4 microdistrict is located between International City-Phase 2, Dubai Silicon Oasis and Academic City.
There are also large malls nearby, such as Dragon Mart 1 and Dragon Mart 2.
Since the area is still under construction, the overall prices even for premium real estate are low enough to attract as many investors as possible.
On average, buying a studio will cost only $60,000 - $70,000, renting — $10,000 in the most expensive case.
The ROI from the studios in Al-Warsan is 10.8%.
Emaar's project, The Greens, is one of the most popular residential communities located along the Sheikh Zayed Highway.
The Greens consists of 40 low-rise vertical residential buildings and is one of the areas with the highest demand for housing.
This is a commercial and entertainment area with a large selection of luxury housing at affordable prices, which is specialized by Emaar.
Residents have access to a variety of entertainment and leisure facilities, green areas, shops and shopping centers.
With a ROI of 10.2%, The Greens provides studios with an average cost of $150,000 or more for investors. The most elite studios are sold at a price from $270,000 to $300,000.
You can rent a studio here for $10,800 - $11,000.
Barsha Heights is a harmonious combination of residential and commercial real estate. The area is perfectly planned and embodies an expensive lifestyle at affordable prices.
The area is popular with representatives of small and medium-sized businesses. Near Barsha Heights there is an ultra-expensive area of Dubai Marina, JBR (Jumeirah Beach Residence) and Al Barsha.
Many residents of the district are simultaneously the main share of the working population and business in Barsha Heights.
A lot of public and household amenities stimulate the demand for studios and small apartments from potential tenants.
The district offers investors an average ROI of about 10.1%. Barsha Heights is one of the most expensive areas in Dubai where you can buy studios. Their price starts from $160,000. The minimum rental rates are at around $11,000.
The area created by the efforts of Nakheel represents one of the highest rental incomes in Dubai.
In International City, clusters of provincial-style villas and low-rise apartments are harmoniously combined. Most of the residential real estate is located along the Al-Aweer highway (Al Aweer Road). There are affordable housing prices, given its high quality.
One of the main advantages of the local studio sector is that most of them are located near large shopping centers and entertainment venues, including the above-mentioned Dragon Mart 1 and Dragon Mart 2 malls. Thanks to this, residents have quick and cheap access to meeting all their basic needs.
The area is fenced off from visitors, which guarantees safety for its residents.
The ROI of the district is 10%, the median price for a studio is $65,000. The cost of elite studios varies from $100,000 to $120,000. The minimum rental price starts from $5,000.
Promising complexes for buying elite studios
So, here are some recommendations in which of the areas described above there are high-quality studios where you can invest your funds.
The list is not complete, but rather contains the most interesting offers on the market.
Glitz 1, Dubai Studio City
Glitz Residence 1, developed by Danube Properties, offers an urban lifestyle and a choice of 146 residential properties. In addition to studios, the complex also houses apartments with 1-3 bedrooms and 5 retail outlets with all the necessary goods for residents.
The complex is located next to the Mall of the Emirates, a multi-storey shopping center with more than 630 shops, 7,900 parking spaces, 100 restaurants and cafes, 80 premium segment stores and 250 branded stores.
Residents also have quick access to the main transport artery of Dubai — the Sheikh Zayed Highway, which allows you to quickly get to all the main areas of the Emirate, including the famous Dubai Autodrome.
The residential complex is fenced off from casual visitors, residents have access to green areas with barbecue areas, a mini-golf course and a swimming pool are located on the roof of the building.
There are several air-conditioned play areas for children, as well as a wellness area with a jacuzzi, bath rooms and an event hall.
There are 2 large gardens nearby.
Samana Golf Avenue, Dubai Studio City
Samana Golf Avenue is a premium residential complex located in the center of Dubai and created by Samana Developers, which provides a resort lifestyle to its residents.
In addition to apartments with 1-2 bedrooms, investors can find here design studios made at the highest level.
The complex consists of 233 residential buildings of different sizes and configurations, made in a style comparable to apartments in a five-star hotel.
The hotel on Golf Avenue is equipped with many amenities, including an indoor gym and an outdoor sports hall, a mini golf course and equipped with everything you need to relax in the landscaped terraces.
Residents can also relax in the pool and admire the cascading fountain.
Al Alka 3, The Greens
Al-Alka 3 is an eight-storey residential apartment developed by Emaar Properties. They include 118 residential properties consisting of apartments with 1-3 bedrooms and many elite studios.
The complex has a private courtyard with a swimming pool.
Since Al-Alka 3 is located in the elite district of The Greens, residents have access to many places for leisure, shops and restaurants, shopping centers of the Mall of the Emirates, as well as to the world-famous Dubai Mall.
Residents of the complex can use a private underground parking, all residential units are equipped with central air conditioning.
All buildings are under the round-the-clock supervision of a private security company.
For recreation, you can visit spacious barbecue areas, gyms and a fitness center, a swimming pool, a basketball court. Special playrooms have been created for children.
There are all the amenities for keeping a variety of pets.
Al Arta 1, The Greens
Al-Arta 1 is another project of Emaar, a 7-storey residential building that is part of the Al-Arta 1-4 residential complexes.
All residential objects, including studios, have spacious interiors, in which the available space is effectively used, as well as an elegant design.
Residents can use a large covered parking area, a fully equipped gym. An open-air play area has been created for children.
Studios, as well as apartments, can be purchased in a freehold property.
Like the previous facility, Al-Arta 1 is under round-the-clock security.
In the complex, residents can visit spacious guest playgrounds for various events, basketball courts, a swimming pool, a barbecue area, a sauna and a Jacuzzi.
All the amenities for keeping different pets have been created.
Madison Residency, Barsha Heights
Madison Residence is a residential complex consisting of 25-storey buildings, each of which has apartments with 1-2 bedrooms and high-quality studios.
Madison Residence is located in the center of the district, from where you can quickly get to the media and IT centers — Dubai Media City and Internet City.
The developer of the building is Deyaar Properties, the construction of the project was completed in 2009.
As in all the above-listed complexes, residents of Madison Residence can use underground parking, swimming pools located on the roofs, fully equipped gyms, barbecue areas, playgrounds, areas for playing table tennis, billiards and air hockey.
The Madison Residence is also under round-the-clock security, and all the necessary conditions are created for pet lovers.