Short-term contract expats dominate market demand
Despite signs that increasing numbers of local residents are showing interest in serviced apartments, it still remains a market dominated by expatriates from around the world.
A robust demand for serviced flats comes from top executives and businessmen on short-term working contracts or business trips, as well as young professionals and young couples. They generally belong to the high-income group seeking fitted-out units with one-stop services. Americans and Europeans are the primary source of demand.
All nationalities are represented in the non-luxury sector, which allows the lower-budget tenant to move straight in without having to worry about buying furniture or incurring hotel bills.
A driving force in the service apartment niche is the influx of expatriate employees, especially those in the engineering profession who are under contract for major infrastructure projects.
Apart from business travellers requiring short stays, others seeking serviced apartments are families on long holidays away from home, and students seeking accommodation close to their universities. As serviced apartments are fully equipped, they constitute a cost-saving option for short-term stayers.
According to CB Richard Ellis, the number of expatriates from the United States and Canada has been increasing over the years, and started levelling off in 1997. Conversely, there was a decline in expatriate numbers from the UK in the two years preceding Hong Kong's handover.
There were some 126,000 expatriate executives in Hong Kong at the end of last year, and a large majority of them required serviced apartments.
The expatriate's choice of serviced apartment is based largely on budget, apartment size, and personal lifestyle.
For example, CB Richard Ellis said De Ricou in Repulse Bay is the most popular of serviced apartments among American expatriate families, because of their large size and the sea view. Gateway Apartments in Tsim Sha Tsui is popular among single expatriates.
Serviced apartments are very popular with families that have just arrived in Hong Kong; they prefer these to staying in a hotel, the consultant said. 'A serviced apartment permits for a smooth transition and allows them to have the semblance of a normal lifestyle,' it said.
However, there are no figures available to compare the number of couples and single people renting serviced apartments, it said.
Cost is one reason there has been no trend so far of local people moving into service apartments, the consultant said, adding that some locals check into serviced apartments when their own flats are under renovation or being decorated.
Some property consultants, however, said local people are becoming a new customer source, especially for hotel operators who are converting their rooms and repackaging and leasing them as serviced flats.
Some local households choose serviced apartments because the flexible terms allow them to move out when they want to buy and move into a new home. 'When people are not certain about the market, they would rather rent,' one consultant said.
