Serviced apartments sector in Hong Kong captures demand for flexible living arrangements
Serviced apartment living is appealing to those who would previously have stayed in hotels or made residential leasing arrangements, due to its flexibility and the central locations it offers
Accommodation providers vying for the same space in Hong Kong face a number of challenges in 2017.
For hotels, a sector temporarily buoyed by an uptick in occupancy at the end of 2016 – despite a slowdown in visitor arrivals – new headwinds loom, according to real estate services firm CBRE.
“Unlike last year, when new supply was limited, there will be 4,000 new hotel rooms coming on stream in 2017, including Kerry Hotel (546 keys), Disney Explorers Lodge (750 keys) and iclub Ma Tau Wai Hotel (340 keys),” CBRE states in a new report. “The substantial increase in room inventory will build pressure across all market segments throughout the year, especially when visitor arrivals is forecast to drop by 2 per cent year-on-year, in 2017.
Therefore, Marcos Chan, CBRE head of research, Hong Kong, southern mainland China and Taiwan, predicts that “a period of adjustment is expected in 2017, in spite of the encouraging signs of recovery witnessed in 2016”.
In the serviced apartment sector, established brands are being challenged by newer boutique operators, and disruptors which have “entered the market loudly”, according to JLL.
The real estate services firm points out in a recent report that newbie alternative accommodation businesses such as Airbnb and HomeAway already account for up to 10 per cent of hotel room bookings in some global gateway cities. And while thus far, these platforms have tended to take market share from lower-tier hotels, JLL notes that “all eyes are on home sharing sites’ aim to accommodate more business travellers”.
Yet, Stella Abraham, head of the residential and relocation services department at JLL, says serviced apartments continue to gain ground from hotels and residential leasing.
“Compared with traditional apartments, serviced apartments typically provide more flexible lease terms, and those with hotel licences can also cater to short-term stays,” Abraham says. “As such, the operation model of a serviced apartment should be able to capture the demand from both permanent tenants, as well as hotel guests. The key lies in balancing the level of quality and rental level, in order to maintain occupancy levels.”
To meet this demand, property developer Sino Land is building its portfolio of serviced apartment properties in Hong Kong. The group operates The Johnston Suites in Wan Chai, The Ventris in Happy Valley and The Camphora in Tsim Sha Tsui. It will open two new properties – The Staunton Suites in Central and The Humphreys in Kowloon – around July of this year.
Sunny Yeung, executive director at Sino Land, agrees that the trend towards serviced apartment living is on the rise “for various reasons”.
“First of all, most serviced apartments are in inner-city areas, offering convenience for transportation and business centres,” he says. “Property prices in these locations are on the high side, so a serviced apartment is a good alternative if you need proximity to an inner city address.”
For professional singles who delay marriage until later, a serviced apartment offers independent living with everything provided. “Furnishings, Wi-fi, utilities – it’s all there. You just have to move in with your suitcase and start living,” Yeung says. Some properties also offer valet services for chores such as laundry, which busy people also appreciate.
Expatriates new to Hong Kong can find a ready-made community in a serviced apartment property, which makes a convenient “first landing abode” as they get to know their new city.
It’s also a comfortable temporary home for residents whose own flat is undergoing renovation.
Quality serviced apartments, such as those operated by Sino, offer higher-end appliances (such as good-sized fridges and washing machines) and reliable broadband, Yeung says. The group’s upcoming properties, The Staunton Suites in SoHo, Central and The Humphreys in the heart of Tsim Sha Tsui, are “going to be an exciting choice”, Yeung says.
“These properties are designed to be a restful cocoon in the vibrant heart of city life,” he says. Attention is paid to privacy requirements, while the neutral décor is calming and relaxing. “Our new apartments offer a tranquil place of rest to prepare for the next busy day,” he says.
Belinda Kuan, general manager at Signature Homes, the luxury residential leasing arm of Sun Hung Kai Properties (SHKP), agrees that location and convenience are foremost attributes of the sector. SHKP’s portfolio of luxury serviced apartment properties includes Four Seasons Place in Central, The HarbourView Place in Yau Ma Tei and Vega Suites in Tsuen Kwan O.
“Guests want to be right in the heart of Hong Kong’s major business hubs and recreational attractions, as well as near to local and international transport links,” Kuan says. “Guests are also looking for flexibility and are attracted to service suite hotels as they allow flexible terms of stay, and provide all the qualities including luxury amenities, 24-hour lifestyle services, and professional staff at the same time.”
Signature Homes’ properties are in locations that “guarantee excellent connectivity locally and globally”, she continues. “For example, the properties are set atop an MTR station which enables guests to access the rail network immediately. They can also check in at the Airport Express desks in Hong Kong Station and Kowloon station.”
No matter what time of day or night, there’s access to services such as in-room dining and limousine transport, with a dedicated Guest Relations team available to assist with their needs.
In terms of luxurious surroundings, “we do not compromise on quality”, Kuan adds. “At Four Seasons Place, for example, the serviced suites were designed by acclaimed Yabu Pushelberg and Bilkey Llinas Design.”