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Serviced apartments are set to become an “established asset class” as demand for the sector grows due to the rise of the ‘bleisure’ – business and leisure – market.
That’s according to estate agency JLL, which said since 2008 investment volumes in the UK have grown from £7.3m to £325m in 2015. The firm has predicted transaction volumes will continue to grow as a result of the “attractive” yield compared with other asset classes.
It said over the next three years there are around 3,500 serviced apartments planned in the active pipeline, three times more than three-star hotels.
London is seeing the majority of this at around 40%, but 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 begun expanding into the sector, with examples including InterContinental Hotel Group’s Staybridge Suites concept, while Marriott and AccorHotels are expected to open their first serviced apartments in 2017.
JLL said the popularity of serviced apartments was down to “innovative” offerings such as flexible work spaces and leisure facilities, along with new business models including some operators now starting to manage companies travel programmes.
Max Thorne, managing director at JLL’s hotels and hospitality team, said: “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 Kong and Australia, there are opportunities aplenty for investors.”
