Boutique operators to gain edge in HK serviced apartment market
Winners will be forward-looking landlords and operators adapting to tenants' changing needs
Serviced apartment providers focusing on a more boutique offering are expected to enjoy higher rent returns than rivals running standard operations.
While demand for serviced apartments in Hong Kong's traditional business districts remains strong, property consultants say landlords and operators with a more forward-looking vision will be the winners in a market responding to changing needs.
Tenants had become more tech-savvy, design-conscious and convenience-oriented, said Stella Abraham, the head of residential leasing and relocation services at JLL.
"Tenants generally favoured well-branded and well-managed boutique serviced apartment buildings as opposed to standard [ones], which typically do not provide a wide range of services and are run by local operators," Abraham said.
This was reflected in the growth in rents achieved by the boutique-type providers, up 4.3 per cent last year compared with gains of 2.1 per cent at more traditional operators.
Demand for serviced apartments had been extremely strong in Central, Admiralty and Tsim Sha Tsui, with occupancy of 80 to 90 per cent, Abraham said.
"We've also seen rising demand in Kennedy Town since the opening of the West Island MTR line. Improved connectivity definitely enhances the appeal of serviced apartment options that were previously considered less accessible and should also help push rents even higher," she said.
Savills said the mid to high-range bracket (HK$30,000 to HK$60,000 per month) was the most popular segment. The consultancy expects serviced apartment rents will rise by up to 5 per cent this year.
Thomas Lam, head of valuation and consultancy, general valuation at Knight Frank, also expects demand will be sustained in the prime districts.
Projects in the pipeline include Swire Properties' Taikoo Place Apartments in Quarry Bay, which comprises 111 units due for occupation as early as July. New World Development will open its Eight Kwai Fong project in Happy Valley in August. Pre-leasing of the project, with 156 furnished residences, has begun. The company also aims to launch a 387-unit development in Salisbury Road, Tsim Sha Tsui, next year.