UNITED STATES-BASED Oakwood Worldwide is planning to expand in Hong Kong and other parts of Asia to compete with deluxe hotels and local developers for a piece of the burgeoning serviced-apartments market. Hong Kong is one of the busiest relocation cities and is a key destination as a feeder market to the mainland. 'It makes it very attractive for multinational corporations to establish themselves here,' Oakwood Asia-Pacific sales and marketing director Catherine McNabb said. 'There is definitely a trend towards serviced apartments. Companies are trying to cut down relocation costs which are very significant in order to reduce operational costs.' Oakwood Asia-Pacific is planning to enter the Hong Kong market by converting a commercial building on Hong Kong Island. The serviced apartments will be in the middle to high-price range. Unlike most businesses hit by the slowdown in leading economies, the serviced apartments sector has benefited as companies downsized and reduced operating costs by trimming perks offered to expatriate staff. Ms McNabb said: 'They [firms] are not extending their contracts and also the type of contracts [for employees] has changed - they are for shorter terms. These are actually benefiting the serviced-apartments market.' The serviced-apartments operator, which already has a presence in Southeast Asia, Seoul and Tokyo, is venturing into Hong Kong despite the depressed property sales market. Oakwood feels the leasing market still has potential as there is a trend of delocalisation and relocation worldwide. Iris Chiu, managing director of Signature Homes, the leasing arm of Sun Hung Kai Properties, said the number of serviced apartments in the SAR had been increasing in recent years as the outlook for the business was promising, boosted by the mainland's entry into the World Trade Organisation. The number of visitors to Hong Kong and going through the SAR to the mainland was increasing. Also helping the growth of serviced apartments were infrastructure and tourism projects in Hong Kong such as Disneyland, the MTR extensions and West Rail and East Rail extensions. As competition intensified, convenience, affordability, flexibility, space, service, quality of furnishing, provisions and facilities at the serviced apartments were important factors in attracting more business. Ms McNabb said half of Oakwood's sales were from cross-selling to clients transferring from other cities, giving the global provider a competitive edge over local or regional providers. There were 5,000 to 6,000 serviced apartments in Hong Kong - making up about 10 per cent of hotel inventories. Most were owned by local property developers. 'Good quality serviced suites in major commercial areas provided with a high standard of service and comprehensive facilities have been very popular,' said Ms Chiu of Signature Homes. Serviced apartments in Hong Kong can be rented at HK$8,000 to HK$85,000 per month with providers earning a 10 per cent margin on either side, according to Ms McNabb. Ms Chiu said some serviced apartments in the New Territories cost less than HK$5,000 a month for a studio measuring 300 square feet, while others in the central business district (CBD) were very much in demand and went for HK$30,000 to more than HK$50,000 per month for a one-bedroom unit. Rentals would exceed HK$150,000 per month for a luxurious apartment. Ms McNabb said: 'However, feedback from our international clients is that they are not totally satisfied with what they get in Hong Kong. The apartments that they rent are either too expensive but not good value for money or they are small and not service-oriented.' Ms Chiu said supply of high-end serviced apartments was limited and there would be no substantial supply becoming available in the CBD in the next two years. In Kowloon, serviced apartments are scattered in districts such as Tsim Sha Tsui, Hung Hom, Tsuen Wan and Kwai Chung. Ms McNabb said the preferred location for serviced apartments was Hong Kong Island rather than Kowloon as most multinational companies had their offices in Central. She said the rate of expatriate movements in Asia created many opportunities in the field. 'The growth potential is unlimited considering the population although the infrastructure in some countries has not caught up with demand. Other markets in the West are saturated. 'In sports and business, Asia has also become a very strong contender to the world market,' she added. Oakwood's business strategy in Asia was to have a property in every key centre and penetrate into secondary cities. Key locations in Asia would be Hong Kong and Singapore, where a project was in the pipeline. Oakwood is targeting an occupancy rate in Hong Kong of 90 per cent - its global benchmark - although hotel occupancy is only at 65 per cent to 80 per cent.