Invest In Serviced Apartments - An Attractive Alternative To Hotels

The serviced apartment market in the UK has become a “recognized sector” in the country and has the potential for future growth, making it an attractive property investment opportunity. The high occupancy rates of this sort of accommodation, in addition to strong yields that are more favorable than comparative asset classes, like residential real estate in the private rental sector (PRS) make the sector more lucrative.

Availability of serviced apartments are considerably lower than those recorded in the hotels sector, which means service apartments may appeal to investors who typically target assets in the hospitality industry as well. Serviced apartments are a nice investment option with long-run occupancy 5.8 percentage points higher than hotels and almost double the operating profit margin.

Serviced apartments clearly offer an attractive alternative to hotels. Serviced apartments can be a convenient and cost-effective accommodation option for leisure and business travellers looking for extended-stay accommodation that resembles apartment-style living.

London has had some of the highest home owner occupancy rates in the developed world and investing in serviced apartments is a relatively new real-estate investment strategy that’s slowly gaining traction globally. Serviced apartments are becoming more widespread across London due to the steady growth of business hospitality industry in the region and therefore high-to-full occupancy rates.

On an average, investors can expect yields of 6.25 per cent on serviced apartments in central London, compared to the 3.8 per cent return currently generated on prime residential properties. Serviced apartments are usually fully-furnished while offering greater privacy. And some services like valet laundry are usually available too.

Serviced apartments offer relatively strong returns with relatively low risk. Some of the major benefits of investing in serviced apartments include a fixed rental income, no vacancies (100% tenancy), long term lease, tax and superannuation benefits, no management fees, no letting fees and no repair and maintenance obligations. 

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