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Apartments vs Villas: which is better to invest?

Property is considered one of the best forms of investment. Some owners obtain property for further resale, while others prefer to rent it out. The most popular question is, "villa or apartment, which is better to invest in?". There is no direct answer, as each of the options has their own benefits and drawbacks. However, what one person considers as a disadvantage could be an advantage for another. Before considering the purchase of a "villa or apartment" ask yourself the right question - "What is the ultimate goal of the purchase?" This is important because many aspects depend directly on lifestyle, purpose and budget. In this article we will talk about the pros and cons between villas and apartments, so you can make the right choice when choosing an investment property.

Basic differences

Villa’s are ideal for couples with children, pets, as well as for those who value privacy. There is no need to worry about noisy neighbours who may disturb your comfort zone, or conversely, to act as a noisy neighbour yourself. The main advantage of a villa is its spaciousness and privacy. By buying a villa, you get your own plot of land, which can then become a terrace, a small garden or a swimming pool. Here you can build a gazebo for relaxation with family and friends, a small entertainment area for children, as well as somewhere quiet to keep pets entertained so they can play in the yard, without causing too much nuance for you nor your neighbours. In addition, as a result of the pandemic, buying a villa is a win-win option as you can live in the property yourself on a permanent basis, rent it out for passive income or leave it as a country home for vacations. On the other hand, villas can be separately built units with their own plots, or adjacent, which implies the presence of a neighbour. Of course, each owner will have their own entrance, parking spaces and some will even have their own plot of land, but this option is a little more confining and secluded.

The main disadvantages of buying a villa is the higher cost compared to an apartment, a little lower return on an investment relative to the apartment (if you plan to rent it out), as well as the more remote locations that villas tend to be situated in which are away from the business areas of the emirate. In addition, it is worth considering that the cost of utilities will be higher as it is a bigger space, you may become more dependent on transportation (owning a car or using public transport, which will incur additional costs, especially if you need to regularly travel to the city center).

As for apartments, everything is much easier (to some extent). Apartments, on the whole, are offered at a more affordable cost, bringing in a higher rental income, especially if you buy in business districts like Downtown Dubai, Business Bay and DIFC. It is a great option for single professionals, couples without children or small families. Many business individuals and expats consider housing close to work and from the point of view of investment attractiveness, apartments are a good choice for investment, as there is demand for both short-term and long-term rentals. The second advantage is the cost of utilities are much lower than that of owning a villa, the closer you are to work the less money will be spent on travel (which is an additional saving), and the maintenance of the building is distributed amongst all homeowners. The disadvantages that we can highlight are that living in an apartment you will only have a balcony and only in the case of a more spacious apartment, with 4-6 bedrooms, will you have your own private terrace and/or pool (but such real estate is rather expensive). In addition, you will be more constrained by the general rules of conduct as set by the building management.

Price range

Apartments vs villas are a popular dilemma for ones who want to make a good investment. Usually a villa costs much more than an apartment as the price of a detached house can be even 5 times higher than the cost of a 2-bedroom apartment in the same area.

In some cases, the presence of elevators and shared amenities of the complexes lead to high monthly service costs. The only advantage is that while living in an apartment complex, there is no need to worry about possible technical problems, as this  is carried out and managed by a group of specialists hired by the building management company. While obtaining a detached villa, you will need to cope with such problems on your own. One of the best examples of villa community projects is Akoya Oxygen Community, located a 40-minute drive from Downtown Dubai. Twenty detached villas, apartment complexes and a hotel are set in the 1,235 acres’ area and boasts a spa complex, a shopping mall, a golf course, swimming pools and sports areas. Beautiful fountains and waterfalls make the atmosphere cozy, with different restaurants and retail stores are also located in Akoya Oxygen. All these features make the community attractive both for buyers and investors. The price of a 4-bedroom villa starts from AED 2,000,000 (USD 545,000) which can then be rented out for AED 45,000 (USD 12,250) annually, or even more.

Other interesting community projects are ones in Damac Hills, located a 20-minute drive from Akoya Oxygen Community and a 25-minute drive from Downtown Dubai. It’s one of the most well-known areas of Dubai, offering different housing types, including apartments and villas. The residences are surrounded by a beautiful golf course and has other amenities such as restaurants, a communal swimming pool, supermarkets, pharmacies, walking areas and kindergartens within the area.

Prices for villa projects in Damac Hills start at AED 1,440,000 (USD 380,000) for a 3-bedroom villa in The Field Community. The cost for a studio apartment in the Loreto sub-community starts from AED 375,000 (USD 102,000) and AED 1,300,000 (USD 354,000) for a 3-bedroom apartment. Therefore, in case you plan to obtain a property with a large living area, it might be more logical to look for a villa or townhouse. But if you want to make an investment, a studio or 1-bedroom apartment is a better option. The average rental price of a 1-bedroom apartment in this area is about AED 20,000 (USD 5,500) per year.

Pros and cons of investing in apartments

Apartments are always in demand. Singles and couples might be interested in 1-bedroom variants in any possible area depending on their job, while big families would look for 3-4 bedroom apartments in the area with facilities such as schools and kindergartens etc. It’s clear that apartments are easier to obtain, manage and rent out, especially if you invest in a unit located not too far from Downtown Dubai.

Pros and cons of investing in villas

Villas are easier to customize, but in the case of renting out, this factor isn’t that decisive. Villas are less popular among potential tenants and the majority of people aren’t interested in living in the suburbs. Villa’s are in demand among big families and celebrities, who need some privacy, however, the rental yield for a villa is lower than that of an apartment. This type of property is difficult to rent out for a short period of time unless it’s located near the sea and therefore can be used for vacation purposes.

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