Developers are expected to lodge objections to new guidelines on serviced apartments with the Town Planning Board, according to sources. Some developers believe the guidelines will result in higher development costs for serviced-apartment projects. Released on September 17, the guidelines aim to prevent developers building 'apartment-like' serviced-flat projects. The Town Planning Board would only allow 'hotel-like' serviced flats to be built on projects based on plot ratios higher than residential properties. The move will increase development costs and management fees because hotel-type projects have to be equipped with central air-conditioning. Other centrally managed facilities such as a dining hall, laundry, recreational and housekeeping facilities are expected in such projects, pushing development costs up further. Sources said some developers would express their opinions that serviced apartments could be of a typical apartment format and were not necessarily hotel-like. It is understood developers will gather examples in foreign countries to prove apartment-like serviced-flat projects were not abnormal. Analysts explained hotel-style serviced apartments might not be suitable for some locations such as Yuen Long or even Tsuen Wan. People were price-sensitive in the lower end of the market. An apartment with central air-conditioning would require higher management fees and reduce the project's attractiveness, they said. Developers might be forced to bear the cost themselves and thus profit margins were eaten up. The situation would be more critical for small- to medium-sized developers because their land costs were relatively higher. When profit margins were further lowered by the serviced-apartment guidelines, the projects' financial viability lessened. Medium-sized developers such as Lai Sun Group, Kwong Sang Hong International and Chinese Estate Holdings have some serviced-apartment projects in Yuen Long, Tsuen Wan, Hunghom and North Point. However, the costs of land for their projects vary considerably. Big developers such as Henderson, Sun Hung Kai Properties, Cheung Kong Holdings and New World Development have such projects in Tsim Sha Tsui, Tsuen Wan and Tsing Yi. It seems developers are increasingly interested in building serviced apartments. Some are particularly enthusiastic about building 'apartment-like' projects as they could sell the flats on a more satisfactory strata-title basis. This trend triggered the Town Planning Board to review guidelines on serviced apartments, which were vague enough to allow some people to take advantage. VOICING THEIR OBJECTIONS Developers say rules on 'hotel-type' flats will raise development costs and management fees Small and medium developers to bear the brunt Apartment format preferred for serviced flats