More facilities are opening up in the New Territories to serve frequent China travellers The trend of serviced apartments springing up in decentralised districts continues to gain pace as tenants look for alternatives to suit their needs. With the increased office and hotel developments in fringe and secondary locations, demand for serviced flats with flexible terms has been spilling over the non-core areas. Developers have pushed ahead with projects in decentralised locations in the past few years by committing to new developments or converting residential and commercial blocks into serviced units. For example, Hang Lung Properties converted its Grand Plaza Hotel in Quarry Bay into Grand Plaza Apartments last year to tap demand for serviced apartments. Cheung Kong (Holdings) and Hutchison Whampoa have packaged some of the rooms in their hotel development Harbour Plaza North Point to lease as serviced flats. Another conversion example is Shama Times Square in Causeway Bay, which was launched in 2002. The development was originally designated as a commercial building but the owner turned it into a successful serviced apartment project. The trend of decentralisation is spreading over the New Territories, while Kwai Chung and Tsuen Wan will see the largest supply of serviced apartments in the next few years. More than 4,000 units are expected to come on stream between this year and 2007 in Kwai Chung, Tsuen Wan and the surrounding area, according to Colliers International. The two biggest projects are in Tsuen Wan, including a 1,696-unit development at 90-114 Yeung Uk Road and a neighbouring development comprising 960 units at 124-142 Yeung Uk Road. They are due for completion next year. This year, the Rambler Crest development in Tsing Yi will provide 504 serviced apartments. Two developments in Kwai Chung are expected to be completed in 2007, providing 1,642 units. They include a 922-unit project in Cheung Wing Road and a 720-unit project in Wo Yi Hop Road. Although these projects are not in traditional business districts, the completion of West Rail has improved the transport infrastructure and shortened the commuting time to business districts in Kowloon and Hong Kong Island. The apartments in Kwai Chung and Tsuen Wan are also expected to provide a cheaper option for tenants, especially those who have to travel frequently to the southern part of China. Simon Lo, director of research and consultancy with Colliers International, said: 'The new supply would be mostly located in Kwai Chung and Tsuen Wan. Since these are far from the traditional business districts, the type of tenant is mostly non-finance oriented and related to import and export trading.' While serviced apartments near the traditional business districts should perform well, Mr Lo said the overall picture was segmented. 'The increase in new supply in decentralised areas does not mean it will create an overall downward pressure on rentals there,' he said. The emerging potential for doing business in China has made a number of serviced apartment projects in decentralised areas an increasingly attractive option for local residents and foreigners. Serviced apartment blocks traditionally have been built in the vicinity of core business districts to provide extra convenience to business travellers who usually demand short leases ranging from three to six months. At present, most serviced apartments are close to traditional business districts such as Central and Mid-Levels on Hong Kong Island. Mr Lo said the sub-markets in Kowloon were more scattered than those on Hong Kong Island. The most popular location is still Tsim Sha Tsui, where quality serviced units are available and sought after. New serviced apartments are emerging in other Kowloon areas, including The Waterfront at Kowloon Station and the Harbour Plaza Metropolis in Hunghom. Sino Land has converted some unfurnished flats in its Hong Kong Gold Coast project in Castle Peak Road, near Tuen Mun, to tap the market growth. Victor Tin, assistant general manager of the leasing department at Sino Land, said the conversion of 30 unfurnished flats into serviced units last year had attracted a strong response with nearly all units leased out. He said the serviced units generated higher rental than conventional flats due to growing demand and the group was planning to turn more units in the project into serviced apartments. Many expatriates were now working on shorter-term employment contracts in Hong Kong so serviced apartments came as the perfect option to provide hassle-free accommodation at flexible terms, Mr Tin said. 'We are satisfied with our current business direction,' he said.