Savills moves into China's serviced flat sector with Pudong deal
Global real estate adviser Savills has entered the mainland's fast-growing serviced flat sector and is looking to manage 20 properties across the nation by 2016.
"China's serviced residency market is one of the strongest in Asia, with Beijing and Shanghai seeing the most robust demand," said Neil Harvey, Savills' residence director.
Harvey also said that an increasing number of foreign clients were the key driving force behind the market as multinational companies continued to invest on the mainland.
Savills, the first global property consultancy to tap the mainland's serviced apartment sector, expects to soon officially launch Savills Residence Century Park in Pudong.
The company also plans to actively expand its portfolio in southern China.
"The [Pudong] property is the forerunner of more projects to be launched in Shanghai and southern China in the coming months and starts us well on track to achieve our goal of 20 Savills Residence properties in China by 2016," Harvey said.
The company has signed agreements for four more properties including two in Shenzhen.
The move to diversify into the serviced apartment sector came after requests from the company's long-time clients for the consultancy to manage their residential properties.
In Shanghai, rents for serviced flats rose 1.6 per cent in the third quarter from the previous quarter, with occupancy rate at 92 per cent, according to Savills.
Savills will compete with leading industry operators such as Ascott, Frasers and Oakwood, all of which are also expanding rapidly on the mainland.
The mainland has been a major source of growth for serviced flat operators as more foreign companies flocked to the country while a soaring number of affluent mainlanders increasingly travelled around the nation.
Harvey said business from mainland travellers could account for 20 per cent of the total in first-tier cities while the percentage could be more than 60 per cent in second-tier cities.
Ten years ago, domestic businesses represented only 2 to 3 per cent of serviced flats operating in the country.
Serviced-flat operators in the major cities normally aim to attract foreign families, single expatriate professionals and domestic travellers.