Serviced Apartments: The Rising Star of the Hospitality Sector?
July 12, 2016 8:41am
According to research from JLL, serviced apartments are soon set to become an established asset class as demand for the sector grows due to the rise of the 'bleisure' market.
Since 2008 investment volumes in the UK have grown from £7.3 million to £325 million in 2015. JLL predicts that transaction volumes will grow as a result of the attractive yields compared to other asset classes.
Over the next three years there are around 3,500 serviced apartments planned in the active pipeline, three times more than 3-star hotels. While London is seeing the majority of this (around 40%) regional hubs such as Manchester and Edinburgh are also gaining pace due to increasing demand, limited supply and lower operating costs*. Hotel brands have also recently begun expanding into the sector, with examples including InterContinental Hotel Group's Staybridge Suites concept. Marriott and Accor Hotels are also set to have their first serviced apartment openings in 2017.
As the sector grows in strength, more consolidation will be seen. More partnerships will follow in the footsteps of the acquisition of SACO by Oaktree and Ascott's joint venture with Qatar Investment Authority.
The sector is innovating to offer more than just a place to stay. Flexible work spaces and leisure facilities such as those offered by 'Go Native' will become more prominent as a response to the new generation of millennial travellers. New business models are also beginning to emerge, with operators also starting to manage company's travel programmes.
Max Thorne, Managing Director in JLL's Hotels & Hospitality team, commented: "This is an exciting time for serviced apartments and apart hotels. Serviced apartment operators are really starting to capture the trend for travellers looking for a 'home from home' with flexible work spaces, and mixed-use social spaces and food and beverage services. With supply at low levels in the UK compared to Singapore, Hong King and Australia, there are opportunities aplenty for investors."
From private rental to Hotels, Serviced Apartments fill the gap by providing travellers with more flexibility in service at an affordable price.
UK Serviced Apartments & Aparthotels Landscape
You can read the new Serviced Apartments brochure here
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JLL's Hotels & Hospitality Group serves as the hospitality industry's global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centres; mixed-use developments and other hospitality properties. The firm's 300 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling over US $36 billion, while also completing approximately 4,000 advisory, valuation and asset management assignments. The group's hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research. For more news, videos and research from JLL's Hotels & Hospitality Group, please visit: www.jll.com/hospitality or download the Hotels & Hospitality Group's app from the App Store.
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