A strong rental market and significant undersupply of studio apartments is driving investor demand for studio apartments says Dubai developer.
- Dubai property investors are identifying the opportunity to buy studio apartments in key districts
- A strong rental market, coupled with rising demand from young business professionals, means buyers can achieve high yields in this sector
- The demand for studio apartments has shaped the design of one of the emirate’s leading developer’s latest project
Dubai property investors are targeting studio apartments – and some of the emirate’s latest developments are being shaped around the rising tenant demand for this type of property.
Earlier this year leading Dubai property portal Bayut.com had just 350 studio apartments listed to rent in the key business district of Downtown. In comparison, there were 2,700 one-bed apartments available to rent at the same time.
Developers often cite the inability to be able to provide sufficient car parking spaces for these type of units as the reason why buildings don’t offer more studios.
But with a rise in the number of young business executives in districts such as Downtown and an undersupply of studio apartments, Dubai’s rental market is currently very strong for investors. In August yields in the city were as high as 7.6%, and it was the apartment sector that boasted the highest annual returns.
This demand to supply imbalance is shaping the design of some of the latest developments to come onto the market in Dubai. Talking at the launch of Marquise Square, a stunning diamond-shaped development of apartments in the Burj Khalifa District, Fahad AlRafi, CEO of developer SRG Holdings, revealed that studio apartments played a key part in the design of his firms latest property.
“We looked at the market and saw the areas, Burj Khalifa and Business Bay area, that this district lacked the studios,” explained Mr AlRafi. “Yes we have one beds, bigger one beds, but it (this area) lacked the studios so we targeted that with the design of the building.”
Adam Price is the Middle East Managing Director of Select Property, the master sales partner for Marquise Square, and he revealed that there is currently huge interest from investors for studio apartments.
Mr Price outlined: “We feel the demand from investors at the moment is for studio apartments; they really do see the undersupply and the strong rental market.”
“From the figures and research we’ve done, studios in the Burj Khalifa District (Business Bay and Downtown) really range from anywhere from 70,000 AED up to 95,000-100,000 AED in some cases in terms of the rental, depending on the desirability of the property.
“We’re extremely confident our investors can make a fantastic yield there. If they’re securing a studio apartment for 900-950,000 AED, you’re probably looking at a 9% rental yield, so it’s not bad at all.”