Top-end serviced apartments in prime areas continue to enjoy a significant rental premium over apartment-like serviced units because of limited new supply, according to Colliers Jardine.
While many furnished residential units come with a wide range of services and facilities to attract more tenants, they are not up to the standard of hotel-style serviced apartments.
Looking ahead, very few new developments in the coming years are expected to achieve the standard set by Hong Kong Parkview and Parkside.
Colliers Jardine said over the next five years, the major supply will include 760 units in two developments at Tsim Sha Tsui and 1,210 units in Central. Tenants looking for quality hotel-style serviced apartments in areas close to Central have limited choices.
Serviced apartments usually enjoy a rental premium, ranging from 20 per cent to 80 per cent, above the average of the normal unserviced units. The consultant estimates the average rental ranges from $40 to $60 per square foot a month. The asking monthly rental is $42,800 to $147,000 per unit. Cheaper units command an average of $22 to $30 per sq ft per month.
The outlook for serviced apartments largely depends on the spill-over effect of China's accession to the World Trade Organisation on Hong Kong's economy and business growth.
The flexible leasing period and terms also make serviced apartments more attractive than conventional flats.