People live, work and travel differently in the modern era, and the hospitality sector has evolved in response to this. These advancements manifest in the spread of the once business-world dominated sector of serviced apartments: stylish and comfortable alternatives to boutique hotels. The sector is fast becoming a dominant force of UK real estate. This year, JLL published a report detailing the market value of these externally managed properties, and the findings show several key insights – and notably positive ones – into this area of the rental sector, in turn explaining how its significance might grow over the next few years.
In 2017, the global total of serviced apartments hit one million. This shows a 30% increase over six years, with Europe being cited as a key player. Within this, the UK is the market leader, with a growth rate of 13% over two years; there are now a total of 22,000 serviced apartments in the UK and Ireland. London – as a hub for business and tourism – has seen a dramatic rise in the serviced apartment industry: a trend that is set to increase. This is mirrored, albeit to a lesser extent, by other UK cities that are important to tourism: for example, Edinburgh and Manchester both reported strong growth.
The interest that this business-leisure market has generated now spans both consumer awareness and investor confidence, resulting in investment volumes in the UK serviced apartment market growing almost five times over the last eight years, from £89m to £486m. As of May 2018, investment in the industry reached a new high, with Brookfield acquiring the extensive SACO portfolio, including its management platform and expansion opportunities, and JLL viewed this as a significant show of investor confidence.
This spirit of positivity within the investor community, coupled with the consistent growth of the serviced apartment market, spells good news for the future of the industry: it’s set to outperform that of hotels. Investors are gaining from the higher profit margin pertaining to flexible, home-style accommodation, as required by an adapting population. JLL predicts that this drive toward the sector will not only increase in London, but become magnified in Europe, with a greater number of established players ensuring a market predicated on quality.
Not only has the property landscape as a whole changed over the last few years, but the serviced apartment industry has also developed in response to commercial innovation, meaning that 50% of serviced apartments are now branded. These lodgings bridge the gap between a traditional hotel and a standard apartment; being design-led and fully equipped, but also private and homey. Our designers at Homewings have contributed to these methodological and contemporary approaches to short-term lettings through tailored interior-design packages that consider the needs of the new consumer. We’re proud of the work that we’ve done with brands such as Sonder, and have put an enormous level of care into fusing traditional design aesthetics with the changing short-term letting market. For this reason, we look excitedly forward to further advancements in the serviced apartment sector – tipped off, of course, by such a wonderful report from JLL.