THE SECTOR

The serviced apartment sector is one of the fastest growing hospitality sectors in the world.

In the UK, the serviced apartment sector first came into focus around 15 years ago as a response to a surge in demand from corporate travellers, who frequently found long-term hotel stays uncomfortable and impersonal. Next came the rise of AirBnB which introduced a viable alternative to hotels and acted as a catalyst for the serviced apartment sector to flourish.

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New brands have now emerged, and global hospitality companies are increasingly targeting UK cities, creating substantial demand across the country for prime assets. Large international brands are realising the sector’s potential and are creating and evolving new brands to penetrate the market. In the first quarter of this year, Hilton opened 23 extended stay hotels and The Ascott Limited, the world’s largest provider of extended stay, announced their target to double their global portfolio from 80,000 to 160,000 units by 2023. IHG also has another 169 extended stay hotels in their Staybridge Suites pipeline.

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Having seen a rapid growth over the last decade, the sector continues to expand at a healthy rate with a pipeline of 20,000 units expected to open in Europe over the next five years, almost double that of last year’s projected pipeline. Over 70% of operators are now planning new properties, creating substantial demand for C1 and C3 buildings across the UK and Europe. Our job is to help our clients satisfy this demand and hand-hold them to completion.

Due to the sector’s increasing popularity, the industry has already reached maturity in the Americas, Middle East and Asia, leaving Europe particularly under penetrated. This alternative type of accommodation is becoming increasingly popular among corporate and leisure travellers worldwide, as it bridges the gap between the AirBnB, hotel and residential markets.

  Serviced apartment supply growth over the past seven years    Source:    The Apartment Service

Serviced apartment supply growth over the past seven years

Source: The Apartment Service

 

BENEFITS FOR INVESTORS

Investing in this sector offers valuable alternative options for commercial parties who want to diversify income streams and improve returns.

Identified as a high yielding asset class, serviced apartment properties provide multiple benefits to landlords:  

·        Up to 25-year FRI lease terms

·        Fixed rents with index-linked reviews

·        Prime yields ranging from 5 – 9%

·        Can be traded on the investment market

SERVICED APARTMENTS EXPLAINED

Saxbury uses the term ‘serviced apartments’ as a catch-all phrase for purpose built apart-hotels (with C1 use class) and residential buildings repurposed for short-term lets (with C3 use class).

The main types of accommodation within the industry are as follows:

Serviced apartments

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BENEFITS

  • Flexible stays (7 to 365 nights)

  • All bills included

  • More space than hotels

  • Professionally vetted and accredited

  • Better value for money compared to hotels

AMENITIES

  • A smart TV and complimentary Wifi

  • Fully stocked with all homewares

  • A fully equipped, eat-in kitchen with modern appliances

  • Own washer dryer, or access to a free communal laundrette

  • 24h helpline

  • Self-check in

  • Weekly housekeeping

apart-hotels

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BENEFITS

  • Flexible stays (1 to 90 nights)

  • All bills included

  • More space than hotels

  • Professionally vetted and accredited

  • Better value for money compared to hotels

AMENITIES

  • A smart TV and complimentary Wifi

  • Fully stocked with all homewares

  • A kitchenette

  • Access to a free communal laundrette or complimentary linen services

  • Daily and weekly housekeeping

  • 24h Reception & Check in

  • Hotel-like services

  • A café / restaurant is often available and operated by a third party

  • Onsite gym


For further information on the opportunities of this sector, please contact us.

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