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Serviced apartment sector keeps going strong
By Cherry Cao |
May 8, 2012, Tuesday
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Print Edition
Print Edition
SHANGHAI'S serviced apartment market showed strong momentum in the first quarter of the year, as both rentals and occupancy rates continued rising to meet robust demand.
Across the city, rentals for serviced residences climbed on average 1.3 percent quarter on quarter to 206.40 yuan (US$33) per square meter per month during the first three months, according to research by international real estate services provider Savills. Year on year, they were up 1.4 percent.
Occupancy rates, meanwhile, rose to 86.7 percent between January and March, an increase of 1.8 percentage points from the previous quarter and 4.8 percentage points up from same period a year earlier.
"Demand remained strong in the first quarter and we have not seen any major impact from what is happening globally so far to date," said James Macdonald, head of research with Savills China. "Businesses in general are still bullish on their China operations and they still need experienced personnel to help them with management, which helps generate the lion's share of demand for this sector."
One project - Kempinski's The One Executive Suites Shanghai - was released in the first quarter, adding 244 apartments to the city's stock.
During the next three quarters, another five serviced apartment projects will be completed in Shanghai, bringing the city's total supply in 2012 to around 954 units, Savills said.
While new supply hitting the market in the next few months may result in a short-term decrease in occupancy rates, industry analysts expect the city's serviced apartment market to maintain its strength over the coming quarters. Occupancy rates are expected to remain above 80 percent and rentals are likely to continue rising by 5 to 10 percent annually, though competition, mainly among international players, has intensified.
"Business was good at our property in the first quarter of this year with average occupancy up 5 to 10 percentage points from same period a year earlier," said Joyce Teng, assistant director of sales and marketing at Oakwood Residence Shanghai, a 112-room serviced residency on Wuning Road, Putuo District. "However, we stay on our toes to seek further improvement in our service and try to add some personal touches to attract more customers."
Oakwood, a leading provider of furnished and serviced residencies with nearly 25,000 apartments throughout the world, last month launched the Oakwood Neighborhood App in the Asia Pacific. It became the first serviced apartment brand in the region to develop a mobile application for customers with a mobile lifestyle.
The location and map-based App content is divided into dining, shopping, wellness, medical, entertainment, interesting places, kids and useful items. Available for download on both Android and iPhone platforms, the service provides insider knowledge about shops offering unique items and bargains, the best time to go to the bank, where to find varied and quality food and places where children can have fun, among other information.
While serviced apartments usually update service packages constantly and renovate to remain competitive, some players are now marketing to broader tenant bases, rather than the traditional multinational expatriates. Their targets are the increasingly mobile, jet-setting and wealthy locals, Macdonald added.
Across the city, rentals for serviced residences climbed on average 1.3 percent quarter on quarter to 206.40 yuan (US$33) per square meter per month during the first three months, according to research by international real estate services provider Savills. Year on year, they were up 1.4 percent.
Occupancy rates, meanwhile, rose to 86.7 percent between January and March, an increase of 1.8 percentage points from the previous quarter and 4.8 percentage points up from same period a year earlier.
"Demand remained strong in the first quarter and we have not seen any major impact from what is happening globally so far to date," said James Macdonald, head of research with Savills China. "Businesses in general are still bullish on their China operations and they still need experienced personnel to help them with management, which helps generate the lion's share of demand for this sector."
One project - Kempinski's The One Executive Suites Shanghai - was released in the first quarter, adding 244 apartments to the city's stock.
During the next three quarters, another five serviced apartment projects will be completed in Shanghai, bringing the city's total supply in 2012 to around 954 units, Savills said.
While new supply hitting the market in the next few months may result in a short-term decrease in occupancy rates, industry analysts expect the city's serviced apartment market to maintain its strength over the coming quarters. Occupancy rates are expected to remain above 80 percent and rentals are likely to continue rising by 5 to 10 percent annually, though competition, mainly among international players, has intensified.
"Business was good at our property in the first quarter of this year with average occupancy up 5 to 10 percentage points from same period a year earlier," said Joyce Teng, assistant director of sales and marketing at Oakwood Residence Shanghai, a 112-room serviced residency on Wuning Road, Putuo District. "However, we stay on our toes to seek further improvement in our service and try to add some personal touches to attract more customers."
Oakwood, a leading provider of furnished and serviced residencies with nearly 25,000 apartments throughout the world, last month launched the Oakwood Neighborhood App in the Asia Pacific. It became the first serviced apartment brand in the region to develop a mobile application for customers with a mobile lifestyle.
The location and map-based App content is divided into dining, shopping, wellness, medical, entertainment, interesting places, kids and useful items. Available for download on both Android and iPhone platforms, the service provides insider knowledge about shops offering unique items and bargains, the best time to go to the bank, where to find varied and quality food and places where children can have fun, among other information.
While serviced apartments usually update service packages constantly and renovate to remain competitive, some players are now marketing to broader tenant bases, rather than the traditional multinational expatriates. Their targets are the increasingly mobile, jet-setting and wealthy locals, Macdonald added.
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