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A one-bedroom apartment or studio? How do I get the best yield in Dubai?

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01 Sep

I’m often asked what’s the best type of property to buy if you’re looking to invest in Dubai real estate. Of course, this can be a complex subject, but generally speaking, I’d say the smaller the unit, the better the yield, especially if your goal is to build a portfolio.

However, the MOST important factor when choosing your property in Dubai is location. We’re often asked what are the three most crucial things to look for when searching to invest in Dubai. The answer is always the same: 1. Location, 2. Location and 3. Location.

We’ve just bought a couple of small units in a development called The Collective in Dubai Hills built by Emaar. It’s one of the city’s first co-living concepts, which is particularly attractive amongst young professionals. The lobbies are huge, built for co-working, and there is a lounge and recreational areas, including an indoor theatre, where friends and colleagues can socialise. The units here are typically smaller than the usual one-bed apartments. They’re approximately 480sq ft in size and ideal for investment purposes. It’s thought properties like this will become the trend in the coming years as service fees will be lower and of course furnishing will be less. We decided to furnish our properties and have achieved close to 9% ROI per annum.

When looking at properties, it’s always worth looking at the amenities within the property. In Dubai, people like convenience, so properties with attractive pools and gyms often sell/rent well. It makes life much easier if people can use good facilities within their own buildings.

Once you have your property, I’d always recommend upgrading it. We bought one property which did so well that we bought two more in the same block. We also furnish them and achieve close to nine per cent ROI.

Similarly, the strategy with one investor was to buy small units in strong areas where no matter what the economic climate, you will see good results. Even in bad times, these properties can bring in 7-8 per cent ROI, and in good times, even more. Their value also steadily increases.

I’d always recommend upgrading a property to make it stand out from the crowd. Even a small investment in good furniture and nice looking photos can appeal and ensure you get a quick tenant. You’re targeting people who don’t want the hassle of buying the furniture, and they’re willing to pay to save that time.

We’ve also found that if you build a relationship with a tenant, it always helps. For example, we find most tenants stay 5-6 years on average, and rarely cause too many problems, so it’s worth investing in relationship and making sure the tenants don’t want to go anywhere. By having the same tenant staying for years, we’ve managed to keep the property tenanted or occupied without missing out on a single day of rent income. Landlords should understand that by keeping the property vacant for a month means that they lose close to 9.2% of the annual rental income. 

So whatever unit you go for in Dubai, it will be very hard to lose, whatever the size of the unit.

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