Dubai is an ultimate business hub, which makes it a home for many businesspeople for a few days or even weeks. The demand for serviced apartments has increased due to it, now more than ever.
Although the range of properties available in Dubai is huge, furnished apartments in Dubai remain a top priority for investors. The investments made for furnished apartments in Dubai for rent are considered best because they offer exceptional rental yield with no management worries.
What are serviced apartments? What are the benefits and shortcomings of investing in serviced apartments in Dubai? Let’s find out!
What are Serviced Apartments in Dubai?
The serviced hotel apartments are fully furnished apartments. They are equipped with every possible amenity. These apartments also offer private space just like that of a home.
Mostly, these apartments are rented out, and the tenants live for a couple of weeks. The serviced apartments are a choice for many because they provide more space and are usually equipped with all essential home-usage equipment, such as washers and dryers.
Moreover, the furnished apartments in Dubai for rent offer a kitchen as an essential, which distinguishes it from other options. Last but not least, as the name signifies, the serviced apartments are fully maintained by third-party companies.
Benefits of Investing in Serviced Apartments in Dubai
Experienced property investors and managers have an idea about the potential of investing in hotel apartments in Dubai. A few main benefits are as follows:
1. High rental yield
Most of the serviced apartments offer a very high rental yield. On average, it hovers around 8-10% annually. It is a great choice to invest in a serviced apartment if you are looking for a property with low premium rates and high rental yields.
2. High occupancy levels
Dubai is home to a massive number of expatriates and tourists year-round. This consistent influx of people ensures a constant demand for serviced apartments in Dubai. With such high demand, the occupancy rates remain consistently high, making it easy to find tenants for your serviced apartments.
You can be confident that your serviced properties will be occupied for the majority of the year, and even if there are occasional vacancies, they will be short-lived. While this advantage is common to most serviced apartments in Dubai, conducting further research can help you identify the regions with the highest occupancy rates.
3. Flexible payment plan
When booking a serviced apartment in Dubai, it typically includes a payment plan that offers flexibility and adjustability.
In certain situations, there may even be an opportunity to settle the installment after the handover. This feature is particularly appealing to investors who have a steady cash flow but may not have the full amount available upfront.
4. Personal usage
Investors or their families can also enjoy the amenities of the serviced apartments free for up to 2 weeks a year (depending on the initial agreement/contract).
5. Completely managed property
The furnished apartments in Dubai are completely managed. The landlords do not have to worry about the day-to-day issues because the managing company sorts everything out. It highly adds to the convenience of the tenants, too.
6. Low entry points
The initial cost of these serviced apartments is more affordable compared to their counterparts. That is primarily because of the specific contractual arrangements involved. This accessibility makes property ownership easier, especially for individuals with limited budgets.
Disadvantages of Investing In Serviced Apartments in Dubai
As there are numerous advantages to owning a serviced apartment, there are some disadvantages, too. A few main challenges are described below;
1. Almost no options for mortgage
You can buy a serviced apartment on a mortgage only if the property is still in the booking stage. Otherwise, the banks do not prefer to finance the mortgage of already-owned properties. So, normally, the only option left is to buy with cash, which can be a problem for many.
2. Poor resale value
Already owned properties are only sold on cash, which makes it highly difficult to sell. It is advisable to invest in furnished apartments in Dubai only if you can afford to lock your funds for a while.
3. Low capital growth
The price of furnished apartments in Dubai does not appreciate much. Despite good rental yield, the overall ROI (Return on Investment) is quite low.
4. High management fee
The cost of managing properties is usually high. It is not an issue if the property is rented out often. However, it becomes a burden when the property remains unoccupied for a long time. It is highly advised to invest in serviced apartments in areas with high occupancy levels.
Expert Tips for Newcomers Investing in Serviced Hotel Apartments in Dubai
The investment in property involves a massive amount of financial resources. Therefore, you must carefully understand the procedure and do your own research to minimize the risk of making a wrong decision.
If you have just started investing in hotel apartments in Dubai, there are a few important aspects that you must understand. Some are explained below.
- The property prices and the rental yields depend mainly on the location. Always choose a region that serves your interest best.
- Property dealers can also play a role in the property demands, so it is advisable to invest in properties built by highly reputed developers.
- The Dubai Land Department regulates every property in Dubai, so be sure about the legal aspects before purchasing a property.
- Banks in Dubai usually offer good mortgage rates. The funds for buying an apartment can surely be sought from the bank.
- The reason for buying a serviced property always yields better rental income as compared to capital gains. So, keeping in view the purpose of buying a property is very important.
Top 5 Serviced Hotel Apartments in Dubai for Rent
If you have decided to buy a furnished apartment in Dubai, here is a list of some of the best serviced apartments in Dubai.
1. Sama Apartment III
Sama Apartments are located on the famous Sheikh Zayed Road, Dubai. The apartment offers one bedroom with two bathrooms and a stunning view from the 18th floor of the building. The design is minimalist with a touch of light colors.
It comes with a huge living room equipped with all modern equipment. Along with it, the apartment building has a gym, swimming pool, table tennis, and racquetball courts. The average rent for these apartments is around 8,065 AED per month.
2. RP Heights Apartment V
These apartments are located at the heart of downtown Dubai and are ideal for young working professionals. These are studio apartments with attached bathrooms. The area is not much, but if you plan to live alone, it would be enough.
The studio apartment is located on the 6th floor, which offers a good view of the city. The building also offers amenities like a swimming pool and gym, and the monthly rental average stands at around 5,325 AED.
3. The Address Residence Fountain Views Luxury Apartment
It is another elegant, fully-serviced apartment in Downtown Dubai, and the good thing is that it comes with two Bedrooms and three bathrooms. The living room is spacious and is perfect for couples or if you want to share the apartment with a friend.
The kitchen has all the equipment installed, and above all, it also has a huge dining area with a terrace. It is expensive as compared to other apartments, as the monthly rent stands at about 24,000 AED.
4. Muraba Residences Apartment
These apartments are a dream come true. If you ever wish to live closer to the city as well as the beach, this is the place to live. It is located in Palm Jumeirah and offers three bedrooms, three bathrooms, and a separate maid’s room.
The apartment is ideal for a family, and the decorations depict the style inspired by the 1980s. The design of the apartment gives you a good amount of natural light in the living room.
The average monthly rent stands at about 28,333 AED, and just like all other apartment buildings, it offers a gym, sauna, and swimming pools.
5. The Jewels Apartment
The Jewels Apartment is located in Dubai Marina. It is one of the best-serviced apartments in Dubai Marina. It is a hotspot for many because of easy access to the Dubai Mall and The Beach at JBR.
The apartments here offer two bedrooms and four baths. The occupied areas are huge and come with a fully furnished kitchen and a beautiful balcony.
Moreover, the apartments also offer a six-seater dining area, not to mention a swimming pool, fitness center, and a kids’ nursery. The average monthly stands at 12,999 AED.
Final Words
Investors who are seeking properties that can ensure good passive income in terms of monthly income may consider investing in hotel apartments in Dubai.
Owning such a property is quite easy because it is all managed by companies. In addition to that, the potential for real estate growth in Dubai is huge, and the influx of businesspersons is going to rise even more. Thus, investing in furnished apartments in Dubai is always a lucrative choice.
