Serviced Apartments - How to Maximise Your Investment
Serviced apartments are fully furnished flats that have similar facilities to hotel rooms. They are usually high-quality units with one to three bedrooms, fully-equipped kitchens and well-furnished living areas.
They’re called ‘serviced’ apartments as they can include maid service, 24-hour reception/concierge facilities and access to onsite amenities such as parking, pools, gyms, restaurants or bars.
Serviced apartments should be fitted with everything a guest is likely to need from TVs and sound systems to high-speed Wi-Fi.
A growing market
There are now about 750,000 serviced apartments worldwide according to the Apartment Service, that’s an increase of 80% over eight years. Interestingly, this growth is not confined to large cities as we’ve seen serviced apartments spring up across the UK.
Ideally, if you’re thinking of investing in serviced apartments, you should look for properties with high-quality facilities in good locations. Bear in mind, your apartment is likely to be let to either a business or leisure traveller. Both will want excellent transport links and decent local amenities and other attractions.
For the traveller, serviced apartments often work out cheaper than staying in a hotel, and they also offer a more secure, personal environment. A HBAA poll showed that 79% of business travellers prefer serviced apartments to hotels.
Length of stay
Serviced apartments can be let for short-term or extended stays. Unlike buy-to-lets, the focus is more on temporary lets that can range from three days to three or more months.
Interestingly, according to PwC, short-term overseas assignments (not short trips, which last for days rather than weeks, but longer-term business projects) are forecast to grow by 50% by 2020.
And as most businesses are looking to economise on the cost of these overseas stays, serviced apartments are expected to be on the receiving end of this increased demand for accommodation.
A serviced apartment will generate a much higher rental return than a standard buy-to-let. In fact, according to the Approved Property Group, it can potentially be 400% more than a buy-to-let.
However, you must factor in running costs as these can be high when you take into account bills, services and maintenance.
Because the apartments are serviced, the interior of the property and outside communal areas are always maintained.
The growing popularity of serviced apartments is starting to attract the attention of property investors as they offer a potentially lucrative business model – if set-up and managed correctly. But it’s not for the faint-hearted and certainly not for everyone. Don’t be fooled by some fancy course telling you it is easy as it isn’t – this can turn into a full-time job and so you must ask yourself the question: why did you get into property in the first place – to create another job for yourself, or for financial freedom?
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