Boutique buzz builds as market thinks small
WingTai, one of several players in the sector, is poised to open $400m hybrid project in Causeway Bay
The boutique serviced apartment may seem a relatively small space - its size is usually cited as part of its appeal - but the market it represents is potentially big and growing steadily.
'Many expatriates are looking for comfortable, exclusive accommodation with a high level of attentive service and a strong sense of home with character,' said Karen Li Kan Fung-ling, corporate development director at WingTai Asia.
This was something many five-star hotels were not able to offer, she said.
The boutique serviced apartment, on the other hand, incorporated all these aspects.
'It's like a private club,' Ms Li said.
The market has been abuzz with talk of the serviced suites since Four Seasons Place opened in Central last year. Two penthouse units in the building were leased at a record $115 per sqft.
Property consultants expected to see more boutique serviced apartments, now accounting for 9 per cent of total stocks, emerge this year.
WingTai is one of several players in the picture. The regional developer will open a $400 million boutique serviced apartment project in the glitzy Causeway Bay shopping district by April.
Ms Li said the development, Lanson Place Boutique Hotel and Residences, was in contemporary style and occupied a converted, old, but unused, commercial building on Leighton Road. There are 194 rooms ranging in size from 380 sqft to 2,050 sqft. The development is 40 per cent-owned by Morgan Stanley Real Estate Fund.
Lanson Place Boutique Hotel and Residences is a hybrid - boutique hotel and serviced apartments. There are six serviced suites. The services provided for both categories are the same, the only difference being the duration of stay of both types of tenant.
A trial run in December resulted in the occupation of 60 rooms at rates starting at $1,000 a night, Ms Li said. About 60 per cent of the tenants were Asian expatriates here on business conference and short-term assignments, and the rest were guests from Europe and the United States. Ms Li was confident occupancy would reach more than 85 per cent over the next 12 months.
She believed boutique serviced apartments had strong business potential as long as developers found good locations.
Annamae Koo, general manager for developer VCC Land, said the market's appetite for boutique serviced apartments was strong.
'Size doesn't matter - a boutique serviced apartment is all about a convenient lifestyle,' said Ms Koo, whose company will launch a 48-room project in Happy Valley next month and a 25-room project in Wan Chai in August.
The expatriate population, according to the Immigration Department, has been growing on the back of reviving business activity. The number of working visas (excluding domestic helpers) issued jumped 10.25 per cent year on year to 21,119 last year.
The serviced apartment market had been gaining in popularity in the past couple of years as multinationals continued to bring in more staff on short-term assignments, said Simon Wong Sau-chuen, associate director of research, CB Richard Ellis (CBRE).
'It's an alternative to long-stay hotel accommodation.'
Mr Wong expected double-digit growth in the sector this year.
In terms of per sqft rents, boutique serviced apartments ranked second highest among four categories - premier, luxury, standard and boutique, according to CB Richard Ellis. Rents in the sector averaged $39.6 per sqft in the fourth quarter last year, compared with $47.3 per sqft for premier, $37.7 per sqft for standard and $35.6 per sqft for luxury apartments.
But in terms of rental growth, boutique serviced apartments were the worst performers of the four. Rents in the segment grew only 1.5 per cent last year, compared with 33.3 per cent for standard, 28.7 per cent for luxury and 11.4 per cent for premier flats, according to CBRE data.
But none of this has dampened WingTai's enthusiasm. In fact, the company is taking its 'small is beautiful' philosophy to the mainland, where it will open its 106-room Lanson Place Jinlin Tiandi, in Shanghai, at the end of March.
The serviced apartments in Shanghai are bigger, ranging from 1,900 sqft to 2,400 sqft, and will rent for between US$6,000 and US$8,000 a month. During a trial run, 32 rooms were let on a one-year lease.
Ms Li said: 'China is definitely an attractive opportunity. It is because supply has been lacking but the expat population is still growing.'
Meanwhile, the company was exploring possibilities for more projects in Shanghai and other mainland cities, she said.