If you’re paying a million dollars to own a studio apartment (essentially a hotel room), something has gone horribly wrong. That could be any number of things (inflation, insane property valuations, unreasonable demand for city life), but that same money could be spent very differently and go much further in a different location.

In Manhattan, in a good building, good neighborhood, 1M USD for a 25sqm studio sounds fine.

New York City consists of more than Manhattan. There are plenty of other places on subway lines where a million dollars buys a lot more.

You pay the million dollars, rent it at $3.5k/mo, get a 3.5% return from rent, and then let the market drive up the value of the place 6-7% a year.

You now have an investment returning a fairly steady ~10% annually, which matches the returns on some pretty bad junk bonds, however on paper your risk is much less. Or you could live in it and just get the 6-7% annual return, with even lower risk.

That's why the apartment costs $1M.

Another factor is the apartment maintenance fees can be steep.