Growth momentum in the serviced apartment sector shows little sign of abating, with operators mulling expansion plans and waiting lists growing longer despite the global economic uncertainty. 'The serviced apartment market has remained resilient despite the downturn, thanks to Hong Kong's proximity to China and its strategic importance as a regional hub for international business,' explains Girish Jhunjhnuwala, managing director of home2home Lifestyles Management which owns and operates five serviced-apartment properties under the Ovolo name on Hong Kong Island. 'We did see a slight dip last year, with occupancy rates coming down to between 75 and 80 per cent for a short period, but business has picked up swiftly and our occupancy rate is now back at 100 per cent, with waiting lists for some of our more popular locations such as those in Central.' The strength of the serviced apartment market can, in part, be attributed to the flexibility, space and quality of the apartment offerings, which look increasingly similar to hotels. 'The line between serviced apartments and hotels is blurring, with apartment operators more design conscious and customer focused. You get more bang for your buck with serviced apartments because there is more space. At home2home, everything from design layout to our services has been thought out to ensure people can make the space into their home from the moment they walk through the door. It isn't just about living. 'For us, it's also to do with how you feel about the space,' Jhunjhnuwala says. The demand for flexible accommodation has grown steadily in recent years, fuelled by the growing number of multinationals bringing in staff to support their expansion plans in the region, with many on short-term contracts and placements. Hanlun Habitats saw a boost in bookings and an increase in rental budgets for its clients starting in March last year, as countries such as the United States were emerging out of the worst global economic crisis since the Great Depression. 'There is a very close relationship between the economic conditions and the growing serviced apartment market we see now. 'To quote the old adage, once bitten, twice shy, companies and individuals affected by the economic downturn are becoming wiser and looking for alternatives in semi-permanent accommodation,' says Pilar Morais, CEO of Chi Residences. It is no surprise then that some local property developers have been quick to jump on the bandwagon. Sino Group, for example, has two luxury serviced apartment projects in the city, including about 150 seaview, serviced apartments at its Hong Kong Gold Coast Residences, and 87 one-bedroom serviced units at Fraser Suites in Wan Chai. Cheung Kong (Holdings), meanwhile, has The Metropolis - a 1.42 million sqft development, comprising two serviced apartment towers, an office block, a hotel and a shopping arcade - above the MTRC terminus in Hung Hom. Though the entry barrier may seem low for new market players, established operators say maintaining a successful and sustainable business goes far beyond the property. It requires thinking one step ahead of the tenant and addressing all aspects of their needs, from the availability of an iPod dock, for example, to personalised services. 'Being a landlord and a serviced apartment manager are two different things. Therefore, with the growing number of players in the market, the differentiating factors in service and facilities will set the leaders apart from the pack,' Morais says. Jhunjhnuwala notes that the recent downturn gave established operators lead time to strengthen their existing efforts as it deterred new players from entering the market. The intense competition is keeping operators on their toes. Hanlun Habitats plans to upgrade its existing properties and facilities soon to meet its growing customer base. Chi Residences, which is constantly eyeing potential sites to add to its growing portfolio of four properties, will open a new development in Wan Chai in early 2013. Meanwhile, home2home will open its first property in Kowloon in March next year. 'Our sixth property will feature predominately two- to three-bedroom apartments. We have seen a preference for bigger apartments, as customers want more space for themselves and their visitors,' Jhunjhnuwala says.
