Serviced apartments: The rising star of the hospitality sector?
JLL currently working on £1billion worth of serviced apartment projects
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.
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."
You can read the new Serviced Apartments brochure here
About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 111,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.