Not all renovation is equal.
Some improvements directly increase rental income. Others are money pits that never pay back.
Here's exactly how we think about renovation:
THE GOAL:
Renovation should achieve one or more of:
1. Higher rental rates (per night / per month)
2. Higher occupancy (faster booking, less vacancy)
3. Higher exit value (premium on resale)
4. Lower operating costs (fewer repairs, lower turnover)
If a renovation doesn't clearly hit at least one of these, skip it.
HIGH ROI RENOVATIONS:
1. Kitchen upgrade
Why: Kitchens sell properties and justify premiums
Cost: AED 25,000-50,000
ROI: 20-40% rent increase possible
Focus: Modern cabinets, quality countertops, functional appliances, good lighting
2. Bathroom refresh
Why: Dated bathrooms kill bookings instantly
Cost: AED 15,000-35,000 per bathroom
ROI: 15-25% rent increase
Focus: Modern fixtures, clean tiles, good water pressure, proper ventilation
3. Flooring
Why: Worn carpet or damaged tiles make units feel cheap
Cost: AED 15,000-30,000
ROI: 10-20% rent increase
Focus: Quality vinyl plank or porcelain tiles, consistent throughout
4. Lighting
Why: Most overlooked upgrade with huge impact
Cost: AED 5,000-15,000
ROI: 5-15% rent increase + much better photos
Focus: Warm, layered lighting, dimmers, modern fixtures
5. Paint
Why: Fresh paint transforms perception
Cost: AED 5,000-10,000
ROI: 5-10% rent increase
Focus: Neutral, modern colors (light greys, warm whites)
6. Furniture and staging (for short-term)
Why: Photos drive bookings
Cost: AED 30,000-70,000
ROI: 20-40% rate increase possible
Focus: Quality, photogenic, durable, cohesive style
LOW ROI RENOVATIONS (OFTEN SKIPPED):
1. Structural changes
Knocking down walls, moving plumbing, etc. Expensive, slow, rarely pays back proportionally.
2. Ultra-premium finishes
There's a ceiling on what renters will pay. Marble countertops don't get 50% more rent than quality quartz.
3. Over-personalization
Bold colors, unusual layouts, taste-specific design. Reduces broad appeal.
4. Building common areas
You can't control these. Don't choose a building expecting to fix common areas.
THE RENOVATION MATH:
Example property:
- Purchase price: AED 850,000 (10% below market)
- Market rent (as-is): AED 80,000/year
- Renovation cost: AED 75,000
- Post-renovation rent: AED 105,000/year
Return calculation:
- Additional annual income: AED 25,000
- Renovation payback: 3 years
- Total investment: AED 925,000
- New yield: 11.4%
Plus: Property now worth more on exit. Instant equity creation.
OUR APPROACH:
1. Acquire below market (10-15% discount)
2. Renovate to "premium standard" — not luxury, not basic
3. Focus on kitchens, bathrooms, flooring, lighting
4. Furnish properly for short-term if that's the strategy
5. Professional photography
Total renovation budget typically: AED 50,000-100,000 depending on unit size and condition.
Target: 20-30% rent increase, 3-year payback, immediate equity gain.
Next email: How to actually optimize rental income — starting with short-term strategy.
Arman