Surge for serviced apartments is exceeding supply across the world, with the sector presenting “long-term rewards” for investors.
- Global serviced apartment numbers have exploded by 80% over the last seven years
- Supply of short-term accommodation is not meeting demand in many regions including Asia and Europe
- Investing in the serviced apartment sector holds many “long-term rewards” for property investors
Serviced apartment numbers across the world have increased by 80% since 2009.
However, this level of increased supply still cannot meet the soaring demand from companies wanting to provide short-term accommodation for their employees.
According to Knight Frank’s 2016 Global Cities report, there are now more than 750,000 serviced apartments globally, driven by a huge uplift in product over the last seven years. 61% of this growth was recorded in the US, a region in which the serviced apartment model has been established for many years, and there was also a 17% rise in units in Europe over the same period.
But the report also notes that almost three-quarters of operators around the world regularly post year-on-year increases in occupancy levels. Short-term corporate assignments are projected to account for a fifth of all international relocations in the three years to 2017, underlining the emergence of serviced apartments as one of the most popular accommodation choices for organisations and employees.
These high occupancy rates have encouraged more developers to consider entering the serviced apartment market, and the report outlines that there’s now an emerging trend of developers looking to add serviced apartments and hotels on the same site.
Tom Bill, Head of London Residential Research at Knight Frank, believes there are “clear long-term rewards in the world of short-term rental accommodation” for property investors. He also added that “cities that embrace the flexibility of models like serviced apartments will reap the economic rewards”.