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.”
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.