Kowloon the hub of future developments
Fresh supply will widen the choice of accommodation as cross-border travellers opt for a more convenient location
The serviced apartments market in Kowloon is poised for an increase in supply over the next two years.
Traditionally, serviced apartments have been more concentrated on Hong Kong Island, with a wide range of luxury and standard rooms.
Because of this traditional focus on Hong Kong Island, the Kowloon market offers fewer options in location and is focused primarily in Tsim Sha Tsui and Hunghom.
Jane Garnett, director of residential services at CB Richard Ellis, says this will probably change over the coming years as more supply comes on stream in Kowloon.
According to CB Richard Ellis, there is an existing stock of 8,451 serviced apartments in Hong Kong. More than half, or 4,468 units, are on Hong Kong Island, 2,743 are in Kowloon and 1,240 in the New Territories.
Ms Garnett expects four major serviced apartment projects in Kowloon will come up in the next two years, involving a total of 1,798 units.
This compares with only 600 units being made available on Hong Kong Island over the same period.
'Since future supply on Hong Kong Island is rather limited, the focus of the market will definitely be Kowloon,' Ms Garnett says.
With the new supply, Kowloon will offer a range of luxury and standard apartments at varying rentals. And with easy access to transport, the popularity of Kowloon apartments will grow.
As with residential property in general, rents at serviced apartments in Kowloon tend to be less expensive than those on Hong Kong Island, although the difference is less noticeable at the top end of the luxury market, Ms Garnett says.
Kowloon serviced apartments tend to offer a wider range of sizes and layouts, and especially popular is a three bedroom option at both Gateway Apartments in Tsim Sha Tsui and The Waterfront at Kowloon Station, she says.
'Target customers are people working on Kowloon-side or travelling to China on a regular basis, also those regularly travelling through the airport. Much of the success of The Waterfront is due to the development's convenient location above the airport railway station,' she says.
Excellent Court is a small-scale project in Jordan targeting mainly singles looking for quality and convenient serviced accommodation.
Raymond Wu, leasing officer for developer Hip Shing Hong Group, says Excellent Court offers apartments of 404 square feet to 499 sqft at a monthly rental of $8,750 to $12,000. They are mainly one-bedroom units, all fully furnished.
He says about 48 per cent of tenants are expatriates, about 25 per cent of them Japanese working in Hong Kong. A 4 per cent rental discount is given for leases of three to six months and a 7 per cent discount for 12 months.
In general, serviced apartments on Hong Kong Island are more popular because they offer more choice and a wider range of rentals to suit varying budgets.
Serviced apartments on Hong Kong Island are available at rents from less than $10,000 to more than $100,000 per month in Central, Sheung Wan, Admiralty, Wan Chai, Causeway Bay, North Point and Repulse Bay.
Riding on the positive market sentiment, Signature Homes is releasing newly renovated show flats at Royal Tower in Central Mid-Levels, a popular serviced apartment project on the island.
Iris Chiu Ching-shi, managing director of Signature Homes, says the new show flats of two and three bedrooms are 931 sqft to 1,385 sqft. They are designed to bring tenants a fresh and new concept of home lifestyle, compared with traditional hotel designs.
She says apartments in Royal Tower are available at a starting rental of $28,000 a month, inclusive of management fee, government rates, maid service, club membership, parking and utilities.
Accommodation terms range from one month to 24. Tenants who commit to a term of three months or longer will be given complimentary shuttle bus and laundry coupons.
Ms Chiu says the overall serviced apartments market was steady last year and Signature Homes maintained an occupancy level of more than 95 per cent in its portfolio.
'Although Sars induced a short-term effect on the market, our occupancy recovered very quickly, mainly due to our premium developments and high degree of customer service,' she says.
'Our clientele is very diversified. Expatriates from the finance and banking sector used to be the major group in serviced apartments. Tenants from other sectors such as electronic products, insurance, trading and pharmaceutical are increasing.
'We have also observed a significant increase of professionals from information technology, engineering and construction as a result of the various infrastructure projects in the territory.'
Ms Chiu says prospects in the serviced apartment market are bright because China's entry into the World Trade Organisation and the implementation of the Closer Economic Partnership Arrangement means that more foreign investors are tapping the potential of the huge mainland market.
Foreign investors are positive about the future development of the mainland market and are looking for new business opportunities, she says.