THE SECTOR

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).

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.

Due to its increasing popularity, the industry has already reached maturity in the Americas and Asia, leaving Europe particularly under penetrated. 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 in the next five years, almost double that of last year’s figure.

THE HISTORY

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.

New brands have now emerged, and global hospitality companies are increasingly targeting UK cities, creating substantial demand across the country for prime assets. At Saxbury, we create opportunities for our clients to satisfy this demand.

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