Conceived in the USA back in the 1980s, the apart-(or condo) hotel
concept of marrying second homes with investing in property has now
skipped across the Atlantic and matured to appeal to a new breed of
investors in the Persian Gulf. In the traditional buy-to-let role it is
the owner who has to put in the hard graft of attracting, vetting and
possibly evicting tenants, not to mention collecting the rent and
carrying out maintenance and repairs. Serviced apartments hotels are
now threatening to kick traditional buy-to-let where it hurts as one of
its key selling points is that it's managed and marketed on the
investors' behalf and therefore hassle-free.
Sometimes called 'serviced
apartments' in the UK, in the US casually named "aparthotels" are
springing up all over business hubs and coastal resorts around the
world at an impressive rate.
Previously in Europe the trend that never reached Dubai was timeshare ownership,
a vehicle that was great for lifestyle and regular usage but wholly
ineffective for investment as owners faced low liquidity of assets,
high depreciation, restrictions on resale and no actual real estate
ownership.
Today
the serviced apartments via hotel model, participants own the freehold
of a quality real estate asset with the added value of high rental
returns. All of this is then underpinned by capital appreciation.
Additionally serviced apartments via hotels tend to give higher levels
of income than traditional holiday homes but the real deal-maker for
the investor is the complete absence of headaches as a branded hotel
management or company takes them all on.
For a serviced
apartment building to work and be able to compete against traditional
luxury hotel chains all the ingredients have to be right. Optimum
locations, comprehensive facilities, a respected developer, strong
brand awareness and of course good on-site management are just some of
those ingredients. But in reality, serviced apartments are carving
their own niche in the marketplace rather than taking on traditional
hotel chains head-to-head, as their offering to the holidaying public
is very different.
In Europe, the serviced apartment products
are quite literally flying off the shelves because they are so
attractive and easy to understand. The pricing is affordable for many,
the rental returns attractive, capital appreciation, free usage, great
locations and the investor owns the freehold. To top it all: they're
tax efficient.
The
clue is in the name, serviced apartments are more 'apartments' rather
than 'rooms' and even the largest traditional hotel suite would be
hard-pushed to compete. With generous square metre sizes relaxing,
entertaining, dining, working and sleeping can be done in separate
areas enabling the children to sleep whilst Dad watches TV and Mum
enjoys a glass of wine with friends. An equipped kitchen also allows
the flexibility of eating in thus saving money and releasing guests
from strict hotel meal timetables - a lazy late breakfast in bed is now
a possibility. Likewise a washing machine saves on laundry costs or
taking home a case full of dirty linen.
A serviced apartment feels like home-from-home, but with greater potentials.
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