I’m Laila Janik, CEO of MYS Real Estate, and I advise clients on using one-bed properties as a stabilizing force in their diverse investments. Here’s how these small units act as a safety net and growth engine at the same time.
Defensive During Downturns: When economic uncertainty hits, many investment classes get volatile. But people will always need a place to live, and affordable apartments often see less vacancy or rent drop than upscale assets. For example, during the 2020 pandemic crunch, we saw luxury villa rents dip sharply in some areas as expats left, but one-bedroom apartment rents only softened slightly and rebounded faster – because the tenant pool for smaller, affordable units remained broad (new hires still came, some downsized from 2BR to 1BR to save money) nikoliers-global.com. If you look at global cities historically, the lowest tier of rental housing tends to stay in demand in recessions (in fact sometimes increases in demand). Thus, your rental income from a one-bed is more resilient if times get tough. This makes one-bedrooms a defensive asset – much like consumer staples stocks in a portfolio that keep steady when cyclicals drop. And unlike gold or bonds which are pure defense but low return, one-beds give you defense with a solid return. They’re like a hedge that still yields ~6-7%! That’s an investor’s dream – risk mitigation without sacrificing much return.
Flexible Exit = Lower Risk: Risk in investing isn’t just about market value – it’s also liquidity risk. One-bedrooms dramatically lower your liquidity risk, as we talked about in Post 16.
Knowing you can sell quickly if you needed to means you’re less likely to be caught in a cash crunch or forced to sell something else at a bad time. It adds robustness to your overall portfolio management. Picture this: you have big money in private equity, which is locked for years, but you keep some in 4-5 one-bed flats. If an emergency or big opportunity arises, you can tap the real estate (via sale or loan) to meet that need, hedging against liquidity risk of your other assets. I’ve literally seen a client avoid having to dump stocks in a market dip to fund a business rescue, because instead they swiftly sold an apartment. That saved them from realizing a large loss on stocks and when the market recovered, they thanked their property hedge for being there.Inflation Hedge: We all know property is a classic inflation hedge – rents and values tend to rise with general price levels. Right now, inflation has ticked up globally. In Dubai, as demand surged, rents spiked ~27% for apartments in a year globalpropertyguide.com (far above inflation, actually increasing real returns for landlords). But even in moderate inflation times, your one-bed’s rent typically can adjust annually (UAE law allows increases per the rental index if you’re below market nikoliers-global.com). So while your cash savings lose purchasing power and some fixed-income yields get negative in real terms, your property’s income and value often ride with inflation, preserving real value.
This makes it a great hedge against inflation. It’s like having a floating-rate investment – when inflation (and often interest rates) go up, rents eventually follow upward, keeping your real yield fairly stable. Many HNWIs from countries that have seen high inflation (looking at you, parts of Asia, Middle East) specifically buy Dubai property as a store of value for this reason – no currency devaluation (AED pegged to USD) and rent rises with cost of living. Meanwhile, if you had a 10-year government bond at 2% and inflation jumps to 5%, you’re losing out. With property, typically rents and values keep pace, maintaining your wealth’s buying power.
Counter-Cyclical Upside: Here’s an interesting observation: smaller apartments sometimes even benefit in relative terms during slow economic periods as noted – e.g., if high-end rents drop 10% but affordable drop only 3%, you’ve effectively outperformed the market by being in the right segment. Then when the economy improves, all boats rise, and your property gains with the tide. So you avoided the big dip and still catch the rise – resulting in a smoother, upward-sloping performance line. That’s essentially what happened from 2015-2019: luxury sales/rents fell more from the 2014 peak, while affordable segments held better, then from 2020-2022 everything climbed, but those who held onto their one-beds lost less in the down and gained in the up – netting out ahead. It’s almost like a built-in “buy low, sell high” cycle that the asset does for you by nature of its demand dynamics.
Portfolio Diversification: You may have stocks, bonds, business ventures... adding one-bed properties diversifies not just by asset class but by risk/return profile. It gives you a relatively high-yield, moderately appreciating asset that doesn’t correlate strongly with equity markets (for instance, Dubai property was rising in 2021-2022 even as some global stock markets were choppy; your property doesn’t care about tech stock valuations, it cares about Dubai’s local supply-demand). So it lowers overall portfolio volatility. I have a client who says his rental units are the only thing that let him sleep at night when his other investments swing – because he knows “come rain or shine, people need to live and I get my rent”. That psychological benefit is huge too. A calmer investor tends to make better decisions.
Example – Protected by Property: I’ll give you a tangible case. David (from an earlier post) had a wide portfolio. In early 2020, his hospitality business took a hit (pandemic impact). But his 5 one-bedroom apartments kept paying rent – those tenants largely stayed, working from home, and kept paying (one asked for a minor 10% temporary discount for 3 months which David granted, as the government encouraged goodwill; small concession). Those rent flows helpedcover his hospitality staff salaries until that business recovered. If he didn’t have steady rental income, he might have had to sell equity in his company at a bad time or take an expensive bridge loan. His property hedge saved him. Fast forward, his business recovered, and property values soared by 2022 – his one-beds are now worth ~20% more globalpropertyguide.com than pre-pandemic, and rents are up too. So the very asset that shielded him in bad times also. made gains in good times. That’s the kind of balanced resilience HNWIs dream of for their portfolio core.
Conclusion: One-bedroom apartments in Dubai might seem humble next to flashy investments, but they pack a punch as a low-risk, income-stable, inflation-hedged asset. They protect on the downside and participate on the upside – the hallmark of a great hedge.
If you want to fortify your portfolio’s foundation and still grow your wealth, let’s chat about incorporating Dubai properties as your safety net. Reach out to me – I can help analyze your current allocation and see how strategic one-bed investments could hedge your risks (be it inflation, liquidity, or market swings) while earning strong returns. In investing, we don’t put all eggs in one basket; we create a cushion for when the ride gets bumpy. A one-bedroom might just be that cushion for you. Let’s build you a portfolio that’s not only profitable, but also prepared for anything. 🛡💰
