Dubai Apartments or Villas: Better Option for Greater ROI in 2018

Real estate has always been seen as a sound investment, and given recent market reports – Dubai is no different.

The wide range of properties available on both the primary and secondary markets in Dubai means that investors interested in the city have no shortage of options when it comes to where to spend their money.

However, this extensive list of options also means that for a first-time investor, it can be daunting to decide where to purchase a home – and what type of home to purchase, a Dubai villa or apartment?

After choosing a location, the next most important step is deciding whether to buy a villa or apartment.

While this is a decision that naturally depends on budgets and personal taste, it is also something that can be influenced by the ROI on apartments and villas. At Bayut.com, we have access to thousands of listings for both types of properties and can help you make the right decision. Here is our guide on how to choose the right real estate investment:

expected ROI

ROI on dubai property — Any savvy investor will have one eye keenly on the expected ROI of his or her investment.

One of the most important things on any investor’s mind is undoubtedly the Return on Investment or ROI.

Pursuant to our market report on the city’s real estate market in 2017, we can reveal that the average ROI on apartments in Dubai over 2017 was 6.84% while villas posted an average of 8.82%. While this may lead one to believe that villas are obviously the better investment, it’s worth noting that a reason behind this difference could be the sheer number of listings of apartments. As they outnumber villas, this causes the average ROI to drop.

Several off-plan projects are also scheduled to be delivered within the next two years, and as these enter the secondary market, we can safely predict this to have an impact on expected ROIs, especially in key areas such as Dubai South.

Another factor that is sure to affect potential investors are the sale price trends for both apartments and villas. In 2017, the sale price trend for three-bedroom apartments was AED 1,567 per square foot, while three-bedroom villas went for AED 1,044 per square foot.

purpose of purchase: personal use

family with little kid — Villas are perfect if you’re thinking about growing your family and love the thought of a garden for your little ones to play in!

If your eventual aim is to actually live in the property you buy, choosing a unit is altogether more personal. Based on your finances, when can you realistically expect to move into your property – is it move-in ready? If not and you have a family, how much space will you need five to ten years down the line?

If you and your family want to enjoy villa living, Arabian Ranches remains one of the most popular areas for people looking to buy. A huge hit with families of all nationalities, the area’s self-sufficiency in terms of amenities, world-class golf club as well as the multitude of green, child-friendly spaces means that Arabian Ranches doesn’t look like losing steam anytime soon. When it comes to other areas with villas, especially those in gated communities, the safety and security afforded by private gardens is a real USP; as is the privacy that an apartment tower may not have.

Dubai marina dubai — With a few villas and several apartments, Dubai Marina is a great option for investors who want the best of both worlds.

However, if you are single or have a partner with no intention of additional members, choosing an apartment might be the way forward. Dubai Marina remains the top area searched for by users on Bayut.com, followed by the iconic Downtown Dubai. These two addresses are not only prestigious but also experienced a decline in asking price in 2017 compared to 2016. For slightly more affordable options in the city’s suburbs (but areas that are quickly growing popular) Silicon Oasis and JVC are good options. Both these areas are priced to sell at the minute, as the developments are not yet complete. However, once all landscaping and recreational facilities have been completed – we can expect prices to rise.

Purpose of purchase: pure investment

pet in a villa — If you’re investing in a villa, be prepared for your tenants to have pets!

If the property you are interested in purchasing is purely for investment, as an additional source of income, choosing whether to opt for an apartment or villa depends not only on your budget but who you fancy your tenants being. Choosing a villa is more than likely to attract families (and probably pets), who will not be keen on moving around, meaning that you can have peace of mind and not have to search for new tenants every so often. However, the only downside is when it comes to tenancy contract renewals. Should the average asking rent of your location increase significantly, as a landlord you may not be able to raise your rent to match.

If you are using a property manager, they will take care of all the day to day running of the property – including finding tenants. This means that choosing an apartment might be more appealing. Given their very nature, studios and one bedroom flats are sought after by tenants who may not see your property as their ‘home’ as much as a short-term abode. However, if you decide to go with a property in the iconic Downtown Dubai, you never have to worry about a supply of interested renters! Another option without having to hire a property manager but one that ensures the smooth running of your investment is by purchasing a hotel apartment.

For some more help in finding the right investment for you, have a look at some of our recommended property resolutions for 2018! ALso, if you want to buy studio flat in dubai, there are many options.

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