UK's serviced apartment sector has 'significant potential' for growth

By Emma Eversham

- Last updated on GMT

Related tags: Serviced apartment, Real estate

The serviced apartment sector, which includes brands such as Accor's Adagio, is set for further growth in the UK over the next five years says Savills
The serviced apartment sector, which includes brands such as Accor's Adagio, is set for further growth in the UK over the next five years says Savills
The UK's serviced apartment sector has 'significant potential' for growth over the next five years according to real estate advisor Savills who predict the expansion of a number of aspiring brands backed by a wave of new investors. 

According to the company's latest UK Serviced Apartment Report the UK has so far lagged behind the US in terms of investment within the sector, mainly because of a lack of the availability of purpose built stock. 

So far this year investment in serviced apartments has totalled £1.3bn in the US, 12 per cent of the nation's total hotel sales, while in the UK investment has been £123.5m, five per cent of total hotel sales. 

However, Tim Stoyle, head of hotel valuations at Savills, said expansion plans for many companies meant that investment volumes could be in line with those in the US by 2018, particularly as RevPAA (revenue per available apartment) growth hit 16 per cent this year.  

He said: “The US is a bigger market so like for like comparisons are difficult, but the dramatic difference in volumes does demonstrate the significant potential for growth in the UK market. New investors to the sector have recognised its investment potential and are committed to expanding purpose built stock.”

Expansion

Many serviced apartment brands, including Roomzzz, Accor's Adagio, House of Fisher and Think Apartments, have all outlined plans for expansion over the next few years and it could be the same for many other companies, particularly if they decide to apply for C1 (hotel) consent rather than seeking to convert C3 (residential) units, Savills said. 

Marie Hickey, associate director of research at Savills, said: “The increasing movement towards C1 (hotel) consent when it comes to expanding stock will help to legitimise the sector and boost future investment. Previous expansion was largely driven by the acquisition of standard residential (C3) units, typically part of larger residential blocks, through leases and or management contracts. In London this has posed a risk to operation as C3 properties cannot be let for periods of less than 90 days.”  

The Savills report was welcomed by the Association of Serviced Apartment Providers (ASAP), whose membership now comprises 57 companies across the UK and Ireland. 

"Many of ASAP’s members have launched new properties in 2013 and have significant expansion plans for 2014 which confirms the growing consumer demand for the serviced apartment product and the positive outlook for the sector," said a, ASAP spokesperson. 

Related topics: Business, Venues, Hotels, Trends & Reports

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Latest Global Serviced Apartments Industry Report confirms these conclusions

Posted by Bard Vos,

The latest Global Serviced Apartments Industry Report, which came out in June 2013, confirms the findings of the UK Report, that there is a significant room for growth in London and the rest of the UK for serviced apartments.
The report (the 4th in the series) was published by The Apartment Service in co-operation with the Travel Intelligence Network. Please visit www.apartmentservice.com/gsair to download a PDF version of the report, or send an email to gsair@apartment.co.uk for a complimentary hard copy.

Bard Vos
Marketing Executive - The Apartment Service

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