I’m Laila Janik, CEO of MYS Real Estate, and I’ve consulted with family offices who find these small units deliver surprisingly solid results at scale. Here’s how having many one-bed units can make an institutional portfolio more robust.
Scaling Without Spiking Risk: If an institution buys a single $50M commercial tower, that’s one asset with one set of tenants – concentration risk. But if they deploy that $50M into, say, 100 one-bedroom apartments across Dubai, they’ve instantly diversified across locations and tenant pool. The risk of any one tenant defaulting or one building having an issue is spread out. It’s the classic “don’t put all eggs in one basket” strategy, executed within real estate. The data shows portfolio vacancy rates on diversified residential portfolios are extremely low. One client’s portfolio of 80 units (scattered in 6 buildings) had a vacancy rate under 5% at any given time, meaning 95% of the units are earning rent nikoliers-global.com. That kind of occupancy stability rivals even multi-family buildings in the West, and far exceeds typical office occupancy variability. This gives an institution confidence that the income stream is dependable. The variance month to month is minimal – a few leases might turn over, but not all at once. So from a risk management perspective, one-bedroom portfolios behave almost like a fixed-income instrument with very steady yield (but with growth potential on top).
Professional Management at Low Cost: Once you have dozens of units, you can justify a dedicated management solution – either building an in-house team or hiring a firm on a bulk contract. This means each additional unit adds very little marginal management cost. In fact, I’ve seen the net yield inch up as a portfolio grows, because negotiated management fees drop and bulk maintenance contracts cut costs nikoliers-global.com. One institutional client paying 7% to a manager for 5 units renegotiated to 5% when they hit 20 units – that alone bumped net yield by ~2%. They also got a preferred rate with a cleaning and maintenance company to service all apartments, lowering maintenance cost by 10% or so across the board. Essentially, as the portfolio scaled, the efficiency improved, and they captured those savings as higher profit. For an institution, that means the difference between a 6% and 7% net yield – which is huge when you’re talking tens of millions invested. And unlike some operational-heavy assets (like hotels or malls with big staff and opex), here the operations are lean. A handful of staff or a small firm can manage 100 apartments no problem with modernsoftware. So institutions can enjoy economies of scale without a proportional increase in complexity.
Data-Driven Optimization: Institutions love data. With many similar units, they can gather powerful insights to maximize performance. For instance, they can track which buildings have the highest renewal rates, which view or layout commands a rent premium, etc., and use that to guide future purchases or improvements. We set up dashboards for one family office showing rent per sqft achieved for each unit relative to market index – they identified two units underperforming, renovated them slightly (new kitchens), and then raised rents to market on next lease – voila, an extra 0.5% yield on those, lifting overall portfolio yield by 0.1%. These micro-optimizations are possible when you have uniform assets and granular data. It’s very similar to how an asset manager might tweak a stock portfolio – except these tweaks can directly boost rent and value. With one-bedroom portfolios, you have a laboratory of units to experiment in and find the formula for peak rental returns. Over time, an institutional owner can fine-tune lease terms, furnishing (some offer furnished at higher rents in certain areas – one client saw success furnishing all his DIFC units for corporate tenants, raising rent by 15% which more than paid for the furniture), and tenant mix to maximize NOI (Net Operating Income). And because they’re doing it at scale, even a small % improvement multiplied across many units yields a big $$ bump.
Predictable ROI Attracting Capital: An interesting outcome I’ve observed: once an institution builds a track record with a portfolio of small units, they sometimes securitize or syndicate it. For example, a fund might use the stable income to back a bond or to raise additional equity from investors highlighting the consistent yield. It’s not unlike how large REITs operate – and in fact, I foresee more residential REITs in the UAE that pool these units to offer investors a slice of the steady rental pie. Why? Because these portfolios are showing quarter after quarter of almost bond-like steady cash flows (with yields far higher than bonds – e.g., 7% vs maybe 3-4% on aUAE bond). For the fund manager, that opens up cheaper financing or expansion capital. We helped a client present their portfolio metrics to a bank and they obtained a credit line to acquire more units at a low interest rate, since the bank viewed the portfolio as very safe collateral (diverse tenant base, easy-to-sell assets, and DSCR (debt-service cover) was high because rent yield exceeded interest by a healthy margin). That allowed them to grow faster, which again – benefits of institutional strategy feeding on itself. In essence, success with one-bedroom investments can be leveraged (literally and figuratively) to attract more capital – a virtuous cycle.
Real Example – Pension Fund Style Investing: Think of it this way: If a European pension fund could get 6-7% net yield reliably with low vacancy from a prime-city real estate portfolio, they’d jump at it. Many are noticing that’s achievable in Dubai’s residential market. I personally know of a Scandinavian pension fund that has quietly built up about 250 apartments in Dubai over the last decade, reinvesting rents to buy more. They treat it like a long-term income annuity – and so far have enjoyed not only the ~7% income but also capital growth (which they haven’t even tapped, they just hold). It has outperformed many of their domestic investments and with lower variance. This kind of institutional validation underscores how one-bedroom units aren’t just a niche play – they can be core holdings for serious investors seeking stable returns.Conclusion: By embracing one-bedroom apartments at scale, institutional investors are achieving the holy grail: equity-like returns with bond-like stability. They get diversification, flexibility, and an asset that’s liquid and growing alongside a booming city. It’s a strategy hiding in plain sight, now coming to the forefront.
If you manage or advise an investment fund or institutional investor, let’s talk about how to implement this strategy effectively. Contact me to schedule a call. I can provide portfolio simulations, connect you with bulk opportunities, and outline a management and reporting framework to treat a dispersed portfolio of one-beds as one cohesive asset – ready for institutional reporting standards. It’s time to think beyond the skyscraper – sometimes, owning 100 apartments can be more rewarding than owning 1 building. Let’s unlock that potential for your fund.
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