Corporate demand for serviced apartments soars

The demand from companies wanting short-term accommodation for overseas assignees – particularly serviced apartments – has soared in recent years and shows no sign of abating, according Knight Frank's 2016 Global Cities report.

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The report says that, over the past seven years, the number of serviced apartments has grown by 80 per cent and now totals more than 750,000 properties worldwide, some 61 per cent of them in the US and 17 per cent in Europe.Knight Frank adds, "The trend looks set to continue with the number of apartments increasing by as much as 18.2 per cent between 2014 and 2015."The fact that demand exceeds supply puts upwards pressure on occupancy levels with nearly three quarters of global operators reporting a year-on-year increase. With such strong occupancy rates, it is no surprise that more hotels are moving into the serviced apartment market."According to the report, there is a growing trend for operators to locate serviced apartments and hotels on the same site, producing savings both during development and operation.The report also describes the private short-let market as "a potentially lucrative option" for investment, adding that online innovations in short-term lettings have been gaining popularity among corporate travellers."While lets of less than 30 days are a grey area in New York, for example," says the report, "this has done little to diminish the growth of online short-term accommodation providers like One Fine Stay and Airbnb."Despite many companies favouring serviced apartments for reasons of transparency and uniformity of service and quality, Airbnb is increasingly targeting corporate travellers and aims to grow a side of its business that currently accounts for 10 per cent of stays."Knight Frank says that, as the short-term sector grows, "ensuring uniform branding and quality levels for short-term accommodation is a challenge, particularly given that future economic growth will be dominated by emerging markets, where supply levels are coming from a lower base".The report says that, while short-term assignments are forecast to grow to over a fifth of all international relocations in the three years to 2017, long-term assignments are expected to fall from 52 per cent to 45 per cent over the same period.It says that the availability of short-term rental accommodation is not meeting demand in many markets, particularly Asia, with the situation being compounded by the fact that such often fall into a legal grey area.Tom Bill, head of London residential research at Knight Frank, commented, "For investors and landlords, there are clear long-term rewards in the world of short-term rental accommodation. Cities that embrace the flexibility of models like serviced apartments will reap the economic rewards."For more Re:locate news and features on serviced apartments, click hereTo read the full report from Knight Frank, click here

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