Economy hits rent levels of serviced apartments

PUBLISHED : Wednesday, 24 February, 1999, 12:00am
UPDATED : Wednesday, 24 February, 1999, 12:00am

Rents for serviced apartments have fallen by as much as 40 per cent since the height of the market in 1997, according to a recent survey from Chesterton Petty.

The top-end prices range between $50,000 and $120,000 per month, a fall of 15 to 30 per cent since 1997, according to the report.

For mid-priced serviced apartments, rents have declined by 10 to 20 per cent to between $20,000 and $50,000 per month.

At the low end of the market, rents have dived as much as 40 per cent to between $7,000 and $20,000 per month.

Despite the residential market downturn and the availability of much cheaper accommodation, the demand for serviced apartments has remained quite buoyant.

According to the Chesterton Petty survey, occupancy rates for luxury serviced apartments stood at 85 per cent while rates for mid-priced accommodation stood at 75 per cent.

At the low end of the sector scale, occupancy rates reached 60 per cent, said the report.

The overall occupancy rate for serviced apartments stood at 79 per cent, according to the report.

'Senior executives of major corporations, who are the primary tenants of luxury apartments, are not seriously affected by the recent financial turmoil,' said the Chesterton Petty report.

'Thus the corresponding occupancy rates of these units have not fallen significantly.' However, the report added that landlords had had to give ground on rents and leasing terms.

'Foreign expatriates and overseas returnees have been attracted by flexible lease terms, a variety of optional services, clubs, facilities and other amenities,' said the report.

Chesterton Petty said rents were stable and a slight increase was expected as the economy slowly improved this year.

It projected that developers would push ahead with plans to bring more serviced apartments on to the market past 2002.

In the short term, the company said this year alone developers would bring up to 1,700 serviced apartments on to the market.

However, they said it was difficult to gauge how many of the proposed units would end up as serviced apartments.

'The nature of short-term leases offered by serviced apartments enables developers to adjust to market changes easily,' said the report.

'There is also the option offering these units for sale as residential units when the market conditions improve.'