Those under 30 may have never heard of the term studio apartment. But you certainly know about studio apartments – or “studios”, in English, which is how most developers announce their launches. They are, strictly speaking, the same thing: small apartments, generally aimed at singles and couples without children.
With this new look, investing in studios has become a rage in markets like São Paulo and Rio de Janeiro. The problem is that the temperature has risen too much and threatens to inflate bubbles in this segment. This may occur due to an excess of launches in regions far from the most sought-after neighborhoods and with less demand for buying, selling and leasing.
The capital of São Paulo, the largest real estate market in the country, reflects this trend. Data from the São Paulo Housing Union (Secovi-SP) illustrates the movement well. From 2016 to 2024, the supply of studios, units of less than 45 m², jumped from just over 7 thousand units per year to 52 thousand. The segment grew more than seven times in eight years.
Studios are typically between 20m² and 40m². This means that, in the children’s space, you can park two Jeep Compasses and a motorcycle. With the studio fever, the market started to invest in even smaller units, such as the 10 m micro-apartments in a building launched in 2022 in the Santa Cecília neighborhood, in the central region of São Paulo.
In the area of this tiny property, two king size beds fit side by side. Or a Jeep Compass. Yes, the space is little larger than a garage space for medium-sized vehicles.
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The concept of a studio apartment fell into oblivion in the 1990s, when the flats craze began in Brazil. These, in turn, were also a kind of reinterpretation of the idea of compact apartments, but with the difference of adding services more common to hotels, such as maid and laundry.
But the real estate market is cyclical. With the lack of land and the rise in square meter prices in large Brazilian cities, developers began to launch increasingly smaller apartments. As advertising is the lifeblood of the business, these compact apartments were renamed studios.
The accelerated expansion has reignited fears that the studio craze could become a bubble, as flats did 20 years ago. The segment collapsed in the early 2000s, when property values fell by 75%. A flat purchased in 2000 for R$250,000 was sold for R$60,000 three years later.
The economist and data scientist at DataZap, Paula Reis Kasmirski, believes there is not yet a bubble in the studio market. “But the excess of launches is a point of concern.” The capitals of São Paulo and Rio de Janeiro have a lack of land and this characteristic drives the construction of smaller units in prime areas.
For Ariel Frankel, CEO of Vitacon, a construction company that focuses on the studio thesis as a form of investment, the market has undergone a trivialization of this type of property. Compact apartments, to be attractive, must be well located, that is, in regions with service infrastructure, close to the subway or bus lanes and cultural attractions, such as parks and event venues.
The problem, according to the executive, is that there have been a number of launches with dubious criteria in the capital of São Paulo. “A studio near Allianz Parque (one of the main concert venues in São Paulo) will never be a bad deal”, he explains.
In São Paulo, one of the factors behind the growth of studios is the city’s old Master Plan, which allowed the opening of extra parking spaces for buildings that mixed studios and traditional apartments. With the update of the law in 2023, the benefit was revised and this type of incentive no longer exists.
The CEO of Lopes Condovel, Carlos Berzoti, sees an excess in the supply of studios in São Paulo. “We already see owners having to reduce the rental price of these apartments by between 10% and 15%.” The expert believes, however, that there is still attractiveness in the segment.
Berzoti compares the movement to another that occurred around the 2010s. At the time, commercial rooms attracted the attention of many investors looking for gains from appreciation. “These small units, made for self-employed professionals and micro-enterprises, became a rage about ten years ago.”
The CEO of Lopes Condovel remembers that there were many launches in regions without demand for commercial properties. “Several projects remained empty after delivery. It wasn’t a bubble, but a lot of people suffered losses.”
The coordinator of the FipeZap index, Alisson Oliveira, highlights that there are still few signs of excess supply in the segment. “But it is an issue to be monitored.” The economist explains that there are differences between the current situation of studios and past crises, such as that of flats.
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Those who invest in studios today are keeping an eye on the seasonal rental market, supported by platforms like Airbnb. “So, whether there will be a problem or not depends on seasonal factors, such as the demand for tourism and for living in this type of property.”
The interest in renting for seasons was one of the motivations for journalist Sueli Carvalho (fictitious name) to acquire two studios, one measuring 42 m2 and the other measuring 48 m2, in the Moema neighborhood, in São Paulo. “It was an opportunity, I bought it off plan to put it on Airbnb. I think about the financial return, but also as income for my retirement.”
The investor explains that the developer itself offers a service to manage the units in a short-term rental pool. “They list it on Airbnb and other services and do the advertising.”
Regarding the risk of the market becoming saturated, Carvalho says he has some fear, but is betting on the location of his studios as a crisis-proof vest. “It is one of the most desirable neighborhoods in the city, it has great infrastructure, it is close to the airport and has easy access to the subway.”
Many studio buildings come with amenities that make housing more attractive. The developments offer community laundry facilities, co-working spaces and even shared cars.
The temperature in the studio market is still rising. There may not be a widespread bubble, but, based on the sector’s own experience, some bubbles may form in specific regions, as in the case of commercial spaces that were launched in neighborhoods without demand. And the sector needs to be careful so that the fever does not become an epidemic.
(Colaborou Rikardy Toge)
