Serviced apartments continue to make headway in booming Asian economies with increasingly global residents
As a city, Hong Kong is used to seeing people from all corners of the globe arriving for business for extended periods of time. It’s been going on for decades, and most leasing agencies agree the numbers are actually rising. The economic surge of 2010 has seen a spike in financial industry arrivals, usually from multi-nationals deciding the time was right to expand their business.
But Hong Kong is by no means alone. Singapore, Shanghai, Kuala Lumpur and Bangkok are all, for various reasons, making noise and drawing corporations to those cities. Metropolitan competition aside, it means the serviced apartment industry across the region is among the healthiest out there.
Colliers International’s 2010 Serviced Apartment Overview for just Hong Kong stated unequivocally that, “The serviced apartment market is expected to see sustainable demand growth on the back of a growing number of business opportunities with overseas companies, who prefer to set up their business in Hong Kong before exploring further into the Mainland China market. Moreover, the prevailing trend of labour mobility around the globe has prompted rising demand for short- to medium-term accommodation for project-based expatriates.”
That trend holds for much of the region, as evidenced by the growth of chains like The Ascott Limited, Frasers, Oakwood Asia- Pacific and Lanson Place. Those are in addition to each major centre’s own brands that do not (or not yet) extend beyond their own borders. Oakwood, for example, features addresses in China, Japan, India, South Korea and Thailand among others, and Lanson Place has properties in China, Singapore and Malaysia. Lanson’s second Shanghai property opened in May 2010, and 50-year-old Oakwood’s latest addition was a month earlier in Beijing.
Serviced apartments are not hotels, and their singular appeal is what separates them. As The Ascott Limited’s managing director for North Asia, Lee Chee Koon sees it, “Compared to hotels, our serviced residences offer more space, comfort and the privacy of an apartment with top quality services. With separate living, dining and sleeping areas as well as a fully-equipped kitchen, our serviced residences provide business and leisure travellers the feeling of staying at home when they are overseas.” Lee points out the inherent value in an apartment as well as fluidity in leasing arrangements. We all know someone whose 6-month contract turned into an unplanned year or more. “Guests also have the flexibility to stay at our serviced residences for days, weeks or for an extended period without having to commit to long leases as in the case of traditional apartment leasing,” Lee remarks. And with serviced residences increasingly offering many of the “visitor” services of hotels — orientation tours for long-term residents and programmes designed to help newcomers understand where they’re living — it’s no wonder the serviced apartment sector remains strong.
One of the most easily recognised names in the industry is Frasers, which operates properties under Fraser Suites, Residence and Place. Frasers operates properties in China, India, Singapore, Thailand, South Korea and Malaysia with the newest addition coming in Jakarta and on Singapore’s Orchard Road. Jastina Balen is Director of Group Branding & Communications for Frasers Hospitality, and she echoes both Colliers’ evaluation of Hong Kong’s serviced flat sector and Lee in the patterns emerging across Asia. “Serviced apartments are gaining popularity for several reasons. Vis-a-vis flats or condominiums, serviced apartments are more flexible in terms of lease tenures,” she begins. And those surging multi-nationals have a great deal to do with the health of the industry as well. As Balen sees it, just because you’re working temporarily doesn’t mean anyone wants to sacrifice comfort these days. “More and more we see MNCs, our corporate clients sending through project teams, quite senior members who are parachuted in to set up offices and infrastructures, or solve issues. They tend to stay for at least a few weeks. And if you are staying more than a few weeks, it helps to have more space. Plus separate living and dining spaces, a kitchen, washing machines, all make living away from home much more palatable.”
The Ascott may boast the most comprehensive portfolio of Asian properties, and includes addresses in Vietnam, the UAE and Australia. The Ascott’s current portfolio of 120 properties will grow by approximately 25 by 2015, including its first in Macau, Ningbo, Chennai and Danang among others. The Ascott Limited’s Lee has a simple theory albeit a familiar one. “Asia is the fastest growing region in the world today. The region’s high economic growth and high level of foreign investments will continue to attract more multinational corporations to set up their offices in Asia,” begins Lee. “As business travel and relocation assignments in the region continue to increase, it will create strong demand for serviced residences from expatriates and travellers.”
And travellers may be the next great demographic. It is entirely possible to rent a serviced apartment on a weekly basis. It’s that reason they’re gaining on hotels as standard business-trip options. “Unlike hotels, serviced apartments have much larger spaces. And after a few days in a room, the walls do tend to close in on you. In addition all the services you would expect in a hotel, is also offered in serviced apartments. That is why increasingly [they’re] a very viable alternative, and they offer great value for money” states Frasers’ Balen. The day serviced apartments add room service to their list of amenities the hotels will really need to watch their backs.