I’m Laila Janik of MYS Real Estate, and I’ve consulted for institutional investors eyeing Dubai. Today, I want to pull back the curtain on how buying in bulk – specifically, lots of one-bedroom units – is a strategy that’s delivering big returns for institutional players.
Economies of Scale in Acquisition: Large investors have the advantage of scale, and they exploit it right from the buying stage. Purchasing multiple units in one go often unlocks significant discounts from developers. This means your effective cost per unit is lower, which boosts your yield (and potential appreciation gains) from day one. For instance, an institutional buyer might commit to 10 or 20 one-bedroom apartments in a new development and negotiate a bulk price perhaps 5-10% below what individual buyers pay. When those units are rented at market rates, the yield on cost might be 8% instead of 7% – a meaningful jump that, for a fund, can translate to millions more in profit over time. We’ve brokered deals where a family office acquired multiple units at once and saved nearly AED 1M via bulk pricing, directly increasing their ROI. Moreover, developers often throw in sweeteners for bulk deals – like waiving 4% Dubai Land Department fees or offering extended post-handover payment plans – further de-risking the investment. In short, institutions “buy wholesale” and later effectively earn “retail” rents, capturing that spread as extra return.
Consistent Yield, Diversified Tenant Base: Another institutional angle is risk spreading. Instead of one massive building with one anchor tenant (where if they leave, a huge portion of income is lost), a portfolio of many one-bedrooms has dozens of independent tenants. A couple of vacancies at any given time won’t materially hurt overall income – in fact, it’s likely other units are overperforming to balance it out. By having units across different buildings or areas, institutions avoid any single point of failure. It’s unlikely that all units are vacant simultaneously (especially in Dubai’s strong market). This results in highly consistent cash flow that institutions crave to meet their obligations (like paying out investors or interest). It’s not uncommon for a large investor’s apartment portfolio to maintain 95%+ occupancy year-round,effectively creating a near annuity-like income stream. I’ve seen data from one fund where even during early 2021 (COVID times), their residential portfolio’s occupancy only dipped to 91% at the lowest and bounced back quickly – much smoother than volatile equity dividends or even office rental streams in that period. The fund manager told me, “These small units turned out to be the most resilient part of our entire global portfolio. ” That speaks volumes – in a way, they behave like a high-yield bond, but with upside and inflation protection (since rents can adjust upward with the market annually, which we saw in 2022 with rents jumping >20% globalpropertyguide.com).
Bulk Operations and Cost Efficiency: Managing many small units might sound manpower-intensive, but institutions turn it into a well-oiled operation. Many hire a single property management firm to handle everything from tenant sourcing to maintenance across the portfolio. This one-stop approach means lower management fees per unit (you can negotiate down to maybe 4-5% management fee for a big portfolio versus 7-8% a retail investor might pay). It also means if, say, 3 AC units need replacing across 3 apartments, the property manager might get a bulk deal or have a dedicated maintenance team handle it in one go – minimizing downtime and cost. One institutional client of ours had 15 units in one building; we arranged for a dedicated maintenance personnel to visit the building weekly and address any minor tenant issues in any of the 15 units proactively. The result? Happier tenants (so renewals went up) and virtually zero major repairs because little issues were fixed before they became big. The economy of scale here meant it was feasible to have that level of service, which a single-unit landlord might not manage. Additionally, with many units, an institution can justify advanced tech – like using software to track leases, automate reminders for renewals or rent payments, etc. They treat it almost like running a hotel or multi-family complex, just geographically spread. This level of professionalism tends to attract and keep good tenants (some tenants prefer renting from a professional landlord because it’s more predictable). Ultimately, that reduces vacancy and turnover costs, boosting net returns.
Portfolio Diversification & Long-Term Growth: Let’s not forget why many institutions are doing this in Dubai: they see the long game. Dubai’s population is growing fast (expected to double by 2040)
kanebridgenewsme.com, and more people means more demand for one-bed rentals. Institutional investors love positioning themselves ahead of such trends. By buying one-bedrooms today, they’re effectively banking land and housing stock for tomorrow’s larger population, while being paid rent to wait. It’s a bit like an oil company acquiring oil wells – you hold a resource that will only get more valuable as supply tightens relative to demand, and you monetize it along the way. Because one-beds are relatively easy to sell piece by piece, an institution could also choose to gradually sell off units to owner-occupiers in, say, 10 years to realize capital gains, much like a developer, but after enjoying a decade of rental income. That’s a dual exit strategy (sell in bulk to another fund or piecemeal to individuals) – either way, they have flexibility to maximize returns. This kind of planning is exactly what many funds outline in their strategies.I recall a case study of a GCC family office that traditionally invested in stocks and hospitality.
They ventured into buying 50 one-bedroom and studio apartments in 2019-2020. Fast forward to 2023: their average acquisition price was around AED 800k, and those units now average AED 1.1M in value (lots of Expo-era appreciation). Meanwhile, they’ve been renting them all along – collecting roughly AED 3M in rent annually across the portfolio. Their strategy paid in two ways: significant capital appreciation and robust rental yields (their yield on original cost is above 9% now thanks to rent rises and their lower cost basis). They told me, compared to some volatile hospitality assets, these units were “boring and wonderful” – minimal drama, just steady performance. And if they ever need to liquidate part to raise cash for another venture, they can sell a handful easily without disturbing the rest. That liquidity option isn’t there with, say, a large shopping mall that either you sell whole or not at all.
Conclusion: For institutional investors, one-bedroom apartments in Dubai might seem like playing small-ball, but aggregated together, they form a powerhouse portfolio. It’s a strategy of harnessing the power of many small, stable assets to achieve big results – consistent income, low vacancy risk, high liquidity, and solid growth prospects. In a way, it’s a modern twist on “don’t put all your eggs in one basket” – put many eggs in many baskets, and watch them all steadily hatch returns.
If you manage a family office, fund, or large investment group and want to explore this “many small assets” strategy, let’s discuss how to execute it efficiently. Contact me for a deep-dive on sourcing bulk deals (we often get wind of developers or portfolios available), setting up bulk management, and optimizing such a portfolio for maximum returns. Dubai’s one-bedroom market isn’t just for small investors – it’s an arena where big players are quietly winning big, one apartment at a time. Let’s make sure you’re ahead of the curve.🏢📊🏠
