Potential Growth For Serviced Apartment Market
Savills has produced a report on the UK Serviced Apartments Market (Spring 2009).
Here are the key points:
Pic: Greenwood Serviced Apartments  | - Falling housing demand is providing expansion opportunities as property developers become more open to leasing and management contracts on their unsold stock.
- The benefits of these agreements to developers is that they provide an income and the ability to sell units back on the open market at a later date.
- 3,400 known serviced apartment units are in the planning pipeline, the bulk of which are in London. Combined with existing units this will bring total supply in the UK to just over 10,500 units.
- 2009 will be a tough year operationally as companies cut travel expenditure in order to reduce costs. Overseas business visitor numbers were already down 10% in 2008 with a further 13% fall forecast in 2009.
- Cuts in companies travel expenditure is likely to mean a greater focus on 'value for money'. This may prove beneficial as serviced apartments offer a more cost effective solution for long term stays than hotels.
- Serviced apartments are assessed against cashflow as opposed to residential values. This should help insulate values from the falls seen in residential values.
- By 2012 build completions of new homes are forecast to be 45% lower than the five year average. This decline in new build residential stock will reduce opportunities to enter into lease/ management contracts.
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Savills UK Serviced Apartments Market Report Spring 2009
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