Asia: Are
Serviced Apartments Becoming the Norm for Business Travellers?
By John
Sylvester
October 2006
The concept
of a luxurious and sophisticated apartment in the heart of the central
business district, with cleaning services and access to high-class facilities
and amenities is nothing new, but recently the service apartment, with
its superior features and lower costs, is increasingly becoming the norm
in Asia. Thailand’s property outlook, for example, continues to remain
very healthy, especially in the residential housing market and the office
building sector.
According to
international property analysts CBRE, their second-half forecast for 2006
and a recent article in the Bangkok Post predicts:
“The serviced
apartment market in downtown Bangkok is expected to improve in the second
half due to rising demand as reflected by the continued increase in number
of expats. The rising
number of expatriates in Thailand is boosting the demand for serviced apartments,
especially in the mid-priced segment."
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The Bangkok Post
highlighted the increase in foreign nationals holding work permits this
year: “According to the Alien Occupational Control Division of the Departments
of Employment, the number of expatriates holding work permits in Bangkok
totalled 64,352 as of May 2006, up 16.1% year-on- year.”
Theerathorn
Prapunpong, associate director of leasing of residential leasing services
for CBRE, said that most expats tended to rent rather than buy property
in Bangkok because Thailand would be only a temporary posting for two to
three years.
“The largest
growth has been in the Japanese community, which now accounts for 22% of
foreigners with work permits in Bangkok,” he said. Many of the new
expats working in Bangkok were in mid-management or technical positions
with mid-range housing allowances. “Therefore the bulk of expatriate
demand will be for the mid-range market”.
During the
last 12 months, 463 apartments and 2,393 condominium units were contracted
in Bangkok’s central business district (CBD) alone, which is the most popular
location.
And CBRE predicts
that 850 new apartments and 13,100 condo unit6s will be constructed in
the central areas in the next two years.
According
to a recent report from James Lang La Salle on the Australian market: “Further
supply additions in the form of serviced apartments are expected to have
an impact on occupancy levels in this market. We predict that the
higher standard of product will see rate growth continue to increase by
approximately 3.0% per annum.”
The sector
is booming, largely at the expense of the traditional hotel industry, with
one decisive factor contributing to their success and growing popularity:
cost effectiveness. Serviced apartments are generally much cheaper
than hotel rooms and, when you consider how much more space a guest is
getting, they offer excellent value for money. Neil Simmons, formerly of
CB Richard Ellis, and co-director of leading Bangkok real estate agent
Soho Properties, said: “Typically, executives stay in temporary hotel
accommodation where they feel isolated. The serviced apartment is
changing all that.”
Up until recently,
business travellers had little choice but to rely on familiar and indistinguishable
hotels.
Martin Haywood
of IPC Consulting said: “My company has always relied on hotels for
accommodation, which felt restrictive. very night I had to battle with
the tedium of pre-conceived surroundings and a predictable menu.”
Now, with the emergence of the serviced apartment, a new alternative has
been created for those who do not want to stay in hotels or commit themselves
to private property rentals.
It has been
a particular problem in Asia where there is a high proportion of expatriate
personnel who are highly transient, moving between capital cities and factory
sites, spending only days at a time in their Asian home-base. There
is an increasing tendency for businessmen to lean towards the serviced
apartment where they enjoy the freedom to work, entertain, cook, sleep
and relax as they would in their own home. It's a break from hotel
rooms and travelling.
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Serviced apartments
are furnished properties with bathrooms, living rooms, fully-fitted kitchens
and bedrooms. Most have daily maid services and nearly all have a
24-hour concierge and provide in-house maintenance. As such, serviced
apartments provide a home away from home and are designed to make any period
of time away as comfortable and homely as possible.
They are designed
for the individual and their family who want high-quality living in short-,
medium- and long-term stays, with a choice of rooms ranging from studio
apartments to large 4-bedroom deluxe penthouses. In short, serviced
apartments are ideal for people who enjoy catering for themselves and their
own space.
This is not
say there are not drawbacks to the business. As Mr Simmons points
out: “Even though the serviced apartment industry has massive potential
and will expand rapidly over the next five years, a cultural change is
needed first. We have yet to see a large swathe of decision-makers
adapt to the corporate housing market of lower-cost accommodation.
One thing that is changing this is the emergence of a small number of global
and regional online booking websites. This is helping to expand people’s
awareness of the serviced apartment industry, particularly websites that
offer transparent cost comparisons and immediate bookings, such as www.serviced-apartment.net.”
His co-director,
Chris Heath, succinctly weighed in the advantages: “Choosing a serviced
apartment allows businessmen to easily choose a suitable location, primarily
in the heart of major cities in Asia, with a broad range of services, such
as broadband internet, fully-equipped kitchens, private parking, international
cable and plasma screen televisions, maid room, daily cleaning and linen
services, international cuisine, swimming pools, health clubs, spas, a
lounge, conference rooms and much more, all within a relaxing and elegant
environment.”
One example
of luxury living in Asia is The Ascott, which has a range of five-star
serviced apartments in most capital cities in the region. Jacinta Teo,
the Director of Sales, Indochina, commented: “We offer luxurious and
spacious private apartments, complemented with comprehensive world-class
services and facilities, ideal for corporate housing. This, coupled
with the convenience of being located in a capital’s business and commercial
district, next to embassies, shopping districts, restaurants and nightlife
is increasing becoming a popular alternative.”
The benefits
of the serviced apartment has a way to go before it is universally recognised
as the corporate accommodation of choice, but its benefits are certainly
starting to make an cultural impact in and around Asia.
John Sylvester
works for Soho Properties in Bangkok. For more details on serviced apartments
go to: www.serviced-apartment.net
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