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Asia Property Report Monthly

Monthly, Bangkok
An in-depth special focus on Asian real estate hot spots, as well as key interviews with important industry figures and analysis
 

Special Report: At your service… at home

Apr 25, 2012
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Serviced apartments offer visitors and long stay guests in Asia an appealing combination of home comforts and hotel style services.


Serviced Apartments


The serviced apartment sector across Asia is continually expanding and diversifying to keep pace with the needs of corporations, business travellers and increasingly, tourists. In most of the region’s capital cities brands like The Ascott Limited, Frasers Hospitality, Oakwood and hotel chains such as Pan Pacific offer a wide choice of locations, designs, facilities and services to long and short stay guests. A burgeoning boutique serviced apartment sector also now complements these global names, with independently operated, Asia focused companies like the Onyx Hospitality Group’s Shama brand providing highly personalised living experiences, and new concept offerings such as Chi Residences in Hong Kong introducing contemporary urban residences for savvy travellers seeking a combination of comfort, convenience and affordability. In a highly competitive market, the range of benefits offered to residents is growing all the time, making it increasingly difficult to distinguish serviced apartments from quality hotels in terms of the facilities and amenities they provide.


Branded living


Although the best hotels in Asia now cater to guests’ every conceivable need, the much touted idea of a ‘home away from home’ is what really distinguishes serviced apartments from their hospitality sector cousins. Not everyone has the same idea as to what makes that ideal home, however, so the choices offered by the larger serviced apartment brands target a broad range of tastes and personal preferences, supported by a wide selection of add on services that cover everything from in-home massage to personal sightseeing tours.


With over 25,000 locations throughout North America, Latin America, Europe, the Middle East and Africa and Asia Pacific region, Oakwood offers a full spectrum of serviced accommodation to meet the needs of corporations and individuals. Oakwood Premier is designed for luxury travellers with elegant apartments complemented by high-end hotel services such as designer furniture and onsite spa facilities. Oakwood Residences meanwhile, offer spacious, comfortable apartments suited to families and the brand’s proprietary ACE Survey methodology is used to conduct customer satisfaction surveys and provide detailed data to determine how to better assist clients with their future needs.


The Ascott Limited, a wholly-owned subsidiary of CapitaLand headquartered in Singapore, pioneered Asia Pacific’s first international-class serviced residence back in 1984. Today, the company’s serviced offerings are divided into 3 separate brands with 2,000 serviced residence units in key cities across Asia Pacific, Europe and the Gulf region, as well as over 8,000 units under development. Each brand caters to a different need and budget. The Ascott brand offers executive level, luxury apartments focusing on comfort and business services, Somerset is geared more towards families with additional amenities for guests with children, while Citadines targets individual business and leisure travellers looking for convenience and value for money. “Generally, our serviced residences in Asia are doing well,” said Alfred Ong, managing director for South East Asia and Australia. “We see strong demand in gateway cities such as Beijing and Shanghai in China, Kuala Lumpur in Malaysia, Singapore, as well as Bangkok in Thailand, where many multinational corporations have set up operations. Our main clients comprise diplomats and business executives from the automotive, banking and finance, construction and engineering, education, electronics, information technology, and oil and gas industries.” In terms of nationalities, the bulk of guests staying at Ascott’s serviced residences in Asia are from Australia, China, India, Japan, Malaysia, Singapore, South Korea, Thailand, as well as the United Kingdom and the United States. “Our guests appreciate that our staff are like friends to them, going the extra mile to provide useful local tips such as information on schools for their children. They can therefore enjoy a home away from home where their needs will be taken care of, and stay focused on their assignments while on the road.”


Also based in Singapore, Frasers Hospitality is a value-based organisation built around an intimate, family oriented culture with a vast choice of high quality apartment types ranging from studios, to one to four bedroom apartments and penthouses. Frasers’ residential offerings incorporate 4 brands: Fraser Suites, Fraser Place, Fraser Residence and Modena, and each property type distinguishes itself through a focused design scheme, with dedicated facilities such as a a Business Lounge with a full suite of secretarial services at Fraser Suites, a Recreation Hub with games consoles at Fraser Place and Wellness Centres with spa treatments at Fraser Residence.


Boutique niche


With the larger, established names drawing consistent demand from the a deep pool of corporate clients that have offices in Asia’s main business hubs, the boutique serviced apartment sector has expanded to meet to the needs of business and independent long stay travellers. Shama was the first boutique brand in Hong Kong and has since expanded regionally to become a market leader. ONYX Hospitality Group, a Thailand based hotel management company, acquired Shama in mid October 2010 and it is now one of ONYX’s key brands with properties in Hong Kong, China and Bangkok and more planned in gateway cities across the region. Shama apartments combine style and functionality with local design touches, welcoming communal spaces and a community approach that creates a sense of belonging for residents through the brand’s “no boundaries” programme, which fast tracks tenants’ social lives by offering a personal concierge service, access to the city’s leading members- only clubs and fitness centres and a constantly updated selection of retail and dining privileges.


Another niche provider based in Hong Kong is CHI Residences, a unique serviced apartment brand launched in 2007 by the same family that created (and later sold) Shama. CHI Residences recently acquired Le Rivage on Connaught Road West, adding 52 units and bringing CHI’s serviced apartment portfolio to 173 units. “Our philosophy at CHI is to create affordable luxury,” said Pilar Morales, executive director, CHI International. “Features such as our Oxyvital air purifier can be considered aluxury,butforusitisa basic necessity to offer our residents clean safe air, especially in a city like Hong Kong. Smart technology is important given the constant connectivity society demands, and we have an integrated communications system in each apartment allowing our residents to access Internet on their TVs and receive communications/notices from our team. Additional services offered at CHI include in room massage, shoeshining, shuttlebus services, yoga classes and social BBQs help our residents balance life and style.”


With the boutique approach to serviced living proving so appealing to those looking for more homely accommodation choices in the region, developers and management companies in every major city in Asia have introduced long and short stay options with added services to entice independently minded guests. The concept is also taking hold in resort destinations, where couples, families and groups can now rent studios or multi-bedroom apartments with onsite services as an alternative to traditional hotel and resort accommodation.


Independent trends


Although the range of fully serviced accommodation options now available means the larger properties attract a significant percentage of professional and leisure travellers across the region, recent trends have also seen short term visitors opting for private homes and apartments made available though online agents. One of the most successful companies in this sector is roomorama, a Singapore based online booking portal that witnessed exponential growth last year, reporting an average gross booking value of US$1,330 with over 80 per cent of bookings for 8-14 nights. Statistics from roomorama show that compared to Q1, 2011, 200 per cent more APAC travellers booked their accommodation via the online platform in the first part of 2012. The website currently lists 50,000 properties in more than 3,600 locations worldwide, and is aiming to more than double the inventory by the end of 2012, with over 20 per cent of the listings in the Asia Pacific region. “We started as a peer to peer service but soon realised that there were plenty of specialist management companies and small, family owned apartment buildings offering mid- to high-end accommodation that appeals to smart, sophisticated and independent business and leisure travellers.” said roomorama co-founder Jia En Teo. “Less than 10 per cent of our clients look for shared accommodation. Couples, families and groups of friends want added privacy and amenities such as their own kitchen and living room and we fill the gap between budget and high-end luxury when it comes to longer stays.”


India’s IT boom drives serviced demand


The serviced apartment concept arrived in India with the growth in the IT and IT ES (IT Enabled Services) sectors. Employees often work on a project to project basis and virtually emigrate to their city of work for long periods.


The IT cities of Bangalore, Pune, Gurgaon, Mumbai, Hyderabad, Chennai have attracted global chains, while one of the local pioneers was Brigade group in Bangalore, which came up with Brigade Homestead Serviced Residences in 2001. According toNirupaShankar,VP,Brigade Hospitality Services Ltd, “This type of lodging flourished because of the IT boom. Serviced apartments cater to the requirement of executives who need to come to the city for extended periods of time, either to set up an office or work on a particular project. Additionally, serviced apartments are larger and less expensive than a typical hotel room.”


A competitive landscape in Bangkok    


Last year saw approximately 470 serviced units added to the Bangkok landscape, which was less than the 600 units added in 2010 and the lowest supply in the past two years. “There is a lot of supply in the market and we’ve seen a lot of factors affecting demand in recent years such as political unrest and the global economic crisis,” explained Surachet Kongcheep, senior manager of research, Colliers International Thailand. “The main target group for serviced apartments in Bangkok are foreigners, especially Japanese, and demand is very sensitive.”


The majority of supply in 2011 came from the completion of the Grande Centre Point Hotel & Residences Sukhumvit – Terminal 21, which added 216 units to the market in the last quarter of 2011. Rooms are appointed in studio and one- bedroom configurations ranging in sizes from 32-46 sqm and 65-70 sqm respectively and the location right at the Asok intersection allows easy access to mass transit lines MRT and BTS as well as Bangkok’s major shopping centres, schools and hospitals.


Location, location


In 2011, more than 300 units accounting for some 65 per cent of the supply in Bangkok, were located in the early Sukhumvit area where residents can conveniently access mass transportation links, office buildings, restaurants and shopping outlets. Supply in late Sukhumvit road concentrates around Thonglor area where residents are lured by similar amenities, while central Lumpini contains many embassies and contains more Grade A units. The newly opened Oriental Residences located in Lumpini area on Wireless road attracts working professionals who need to be close to the city’s business and diplomatic centres. The 145 grade A serviced apartments range in size from 45 sqm for a studio to 160 sqm for a three-bedroom unit and come with specialised personal services such as luxury toiletries,butler, in-residence dining amongst others. Prices start at THB5,300 (US$170) per sqm for an executive deluxe room and guests have access to facilities such as a 20-metre tile encrusted pool, an open air lounging area in addition to a whole range of services for families such as babysitting service, a children’s pool, baby cots and strollers.


Another popular choice is Shama Sukhumvit, a 90-unit complex on Sukhumvit Soi 2 that caters mainly to a European and, to a lesser extend, Asian clientele. The development has adopted a very resident-centered approach by not offering any F&B outlets that attract external visitors. “We target long-term residents and we want people to feel at home here,” said Sukamal Mondal, the managing director of Shama Sukhumvit,, “Residents can feel safe letting their children use the facilities alone.”


The road ahead


Going forward, approximately 420 units are expected to be completed this year in Bangkok, continuing a trend of fewer launches. According to Kongcheep, the serviced apartment market is not booming as it has in the past due to a highly competitive market, which has led to the postponement of new projects. However, areas outside of the CBD saw an increase in supply and demand as some foreigners prefer the suburbs, some of which have very good international schools.


“Although they lack services and some facilities,” said Kongcheep, “the lower rental rates are more attractive for long stay residents. In addition, hotels are also competing with serviced apartments as many expatriates need to stay temporarily in a hotel first before moving to more permanent apartments or condominiums.”


Manila is no longer just a one night stop for tourists. Demand for long-term housing on the rise and the Philippine capital is delivering.


Moving into Manila


As investments open up the Philippine market, Manila is seeing an influx of outside visitors staying for longer periods of time. Government visa reforms include an increase in the visa- free privileges for visitors from 166 territories from 21 to 30 days and a 30-day visa-free stay for Chinese nationals travelling to the Philippines as part of a tour group. “In the near future, we also anticipate the issuance of a special long-stay visa of six months for active retirees,” said officer-in-charge of the Department of Tourism Evelyn Alcaraz-Macayayong.


Such policies directly benefit the serviced apartments sector and global operators such as The Ascott Limited are meeting the new demand. Ascott hosts four property types in Manila: the Ascott Makati, Somerset Millennium Makati, Somerset Salcedo Makati and Somerset Olympia Makati. There are also plans to extend Ascott services in the form of two new properties: Ascott Bonifacio Global City Manila and Citadines Salcedo Makati. “The strong and steady growth of the call centre and BPO industries, and increasing tourism arrivals, creates significant demand for our serviced residences,” said Arthur Gindap, Ascott’s country general manager for the Philippines. “With the two new properties, we will further strengthen Ascott’s position as the largest international serviced residence owner-operator in the Philippines with close to 1,200 apartment units across six properties.”


As Manila continues to move forward with new building projects, other countries have begun to take notice of the boom taking place. The Philippines recently became the first country in the world to have a resident investment advisor to China and with this kind of attention, serviced apartments are taking a lead in terms of housing options. Business and leisure travellers looking for long term accommodation are being offered more than the a standard stay.


Fraser Place Manila is another high-end giant, suitable for both business and leisure travel. With rates between PHP11,100 (US$259) to PHP18,500 (US$431) guests enjoy floor-to-ceiling picture windows, gourmet kitchens, and unique Sky Gardens. Then there are independent options like Picasso Boutique Serviced Residences located in the heart of Salcedo Village, where guests are greeted with the same unique qualities as the artist for which it is named. The designers treated all the rooms as a canvas, with a colour palette inspired by Picasso.


Architect Dominic Galicia incorporated cubism into the building’s design and along with interior designer Tina Periquet, turned an old landmark into what is now labelled as “something new and exciting” for Manila. The facade is layered with pictures that come together only when one stands from a certain angle. Inside, ceiling mirrors reflect what is happening on the streets below, while an in-house art gallery showcases new art every few months. A full service wellness centre spa and the Brasserie Boheme restaurant can also be found within the ultra- modern Boutique.


In another move to capture guests’ imaginations and needs, the serviced apartments of Oakwood Premier Joy were opened in 2009 catering not only to long-term travellers but also to their furry companions. “Our clients have high expectations in terms of product and service,” said Oakwood general manager Rick Erdos. “Oakwood Premier exhibits an international design spirit so that every guest feels comfortable in Oakwood as his temporary residence, regardless of nationality or country of origin.”


When creating a new place for visitors to stay, developers in Manila are ensuring that unique aspects such as Oakwood’s pet- friendly rooms or Picasso’s artist- themed interiors will launch Manila into the world of high-calibre serviced living.


A curb on immigration and new stamp duty rules on foreigners could spell good news for the serviced apartment market in Singapore.


Curbs lead to demand in Singapore


The Additional Buyers’ Stamp Duty (ABSD) implemented in December last year, coupled with restrictions on foreign talents after the general election could be good news for the serviced apartment market.


In a report released recently on the private property market for the first quarter, DTZ notes that foreigners have now retreated from the market, particularly in prime areas. “We expect a higher proportion of local buyers to dominate the market going forward as foreigners take time to adjust to the new 10 per cent buyer’s stamp duty they now have to pay. This will have a greater dampening effect on sales volume and prices in the prime areas,” said Chua Chor Hoon, head of Asia Pacific Research.


This means foreigners are now likely to switch from buying to renting, especially those who are in Singapore for the short to medium term but want to live in prime areas. “Corporate clients are committing to shorter-term agreements generally,” said Tonya Khong, area general manager for Frasers Hospitality Pte Ltd and president of the Serviced Apartments Association of Singapore. “At Fraser Suites, Fraser Place Roberston Walk and Fraser Place Fusionopolis, even our newest property on Fraser Residence Orchard, our residents still stay for anything from one to six months. In the past, there were more residents who would stay with us for up to four five years. We still have some, those who relish the services we offer, but not as many these days.”


Flexibility and convenience


Typically, foreigners prefer renting condominium units in prime districts, which requires them to sign a one or two year lease. Breaking the lease would be a costly, unless a diplomatic clause is included, which is subject to the landlord’s acceptance. A serviced apartment, however, offers flexibility without infringing on any standard tenancy agreement.


Frasers say serviced residences are still very much the preferred choice for those on projects, families that are relocating before they find a more permanent home and even those on longer stay holidays. “Serviced apartments offer bigger spaces, typically with separate living areas, a kitchen, washing machines and dryers, in addition to full fledged facilities of hotels, like swimming pools and gyms, steam/sauna facilities.


In addition, Frasers properties also cater to children with the elaborate Kids Club facility and activities,” said Khong.


Strong demand


Market leaders say demand has been strong. Last year, occupancy across Far East Hospitality’s portfolio of hotels and serviced residences averaged over 80 per cent. “Singapore has been the choice destination hub with its good and secure infrastructure of services from banking and finance, medical and education, to hospitality and tourism, making it ideal for businesses and meetings, ” said Raphael Saw, chief operating officer, hospitality business group & director, hospitality operations at Far East Organization. “The role of Low Cost Carriers (LCC) is also growing in significance, making Singapore a key hub for regional, and now, long haul LCC. With this, coupled with the other trends outlined, more visitors are coming to Singapore, in particular those from Asia and Australia.”


Meanwhile, Ascott is reporting an average occupancy of about 85 per cent so far this year across its Singapore properties. “In Singapore, demand for serviced residences has been very strong, driven by the inflow of foreign direct investments, the increasing number of multinational companies setting up their operations in Singapore and Singapore being a key player in the MICE market in the region,” said Alfred Ong, managing director for South East Asia and Australia, The Ascott Limited. As of 2012, Ascott operates 908 apartment units across eight properties in Singapore which include Ascott Raffles Place, Citadines Mount Sophia, Somerset Bencoolen, Somerset Liang Court, Somerset Orchard, Somerset Grand Cairnhill, Riverdale Residences and The Heritage. Explaining the rosy outlook, Ascott said Singapore is a key business and leisure hub.


“Singapore continues to attract business and leisure travellers as the government implements various initiatives to reinvent Singapore as an exciting leisure destination and strengthen the country’s position as a leading convention and exhibition city in Asia. We continue to actively look for opportunities to expand our presence in the country,” said Ong.


Phuket has been a popular destination for many years and already offers a wide variety of good hotels and private villas.


Island Alternatives


Phuket attracts global visitors for a number of reasons, among them the beaches, the golf, the sailing and obviously the weather. The island’s enduring popularity has given rise to a diverse choice of long and short stay accommodation choices catering to every taste and budget. The appeal of a serviced apartment lies in the space and amenities offered, particularly to families or groups of friends who want to enjoy a holiday that also comes with a sense of home comfort.


BYD Lofts


Nestled down a quiet soi in the heart of bustling Patong is the upscale BYD Lofts. The serviced apartments range in size from 50 sqm to 160 sqm. and located but a stone’s throw from the
beach, provide guests with all the amenities you would expect from a 5 star hotel. BYD Lofts offers guests free WiFi, a concierge service, a restaurant, bar, swimming pool, room service and in-room massage amongst other services. The serviced apartments are gaining popularity as guests have all the mod cons they would expect to find at home, including a flat screen television, ipod dock, and fully equipped kitchen. The minimalist design of the rooms makes them practical as well as luxurious, making the stay feel very much like home away from home. www.bydlofts.com


Karon Hill


As the name suggests, these apartments stretch out along the hillside in Karon and offer views of either the the lush island landscape or the sea. The location is slap bang between Patong and Kata giving guests multiple options for nightlife, dining, shopping and watersports activities. The apartments range from 44 sqm to 332 sqm and come with fully fitted kitchens, comfortable bedrooms, western style bathrooms and flat screen televisions. For families or older guests, extra peace of mind comes with an on call doctor, the tour desk can also help arrange a round of golf, diving and snorkelling or suggest the best island sights. www.phuketkaronhill.com


Serenity Resort and Residences


Comprising chic white buildings nestled and staggered along landscaped gardens which slope down to a stretch of quiet Rawai beach, Serenity offers a total of eight room types ranging from 30 sqm studios to 342 sqm three- bedroom penthouse suites and 350 sqm pool residences. The entry- level Serenity Room is comparable to a hotel counterpart in terms of in-room amenities — en-suite bathroom, coffee/tea making facilities, flat screen TV with DVD player — but the similarities stop there. The next category up is the 110 sqm Serenity Suite, which like all remaining room types, features a large bathtub in the bathroom, an oversized sun terrace with loungers, a spacious living area, dining corner, and a fully-equipped kitchen complete with plateware and cutlery. As the name suggests, the H20 Suite and Pool Residence also boast private pools. Resort facilities include property-wide WiFi, a beach restaurant with adjacent swimming pool, seaside bar, gym, and spa.


www.serenityphuket.com


Kuala Lumpur's serviced apartment market has had positive reactions from both buyers and sellers.


STEADY DEMAND IN KL


Demand for serviced apartments in KL is largely driven by a strong domestic economy, attracting foreign companies and expatriates. The majority of the supply is located in KLCC with easy access to major office buildings and mass transit systems making it an obvious choice for short-term expat stays. “Users are predominantly tourists and executives who come here with more and more of these city tourists choosing to stay in serviced apartments over hotels due to the lower prices and similar services. Tourism Malaysia, the official tourism agency, aims to reach 36 million annual visitors in 2020, up from 24.7 million last year, which if reached will likely have a positive effect on the occupancy rates of serviced apartments.

New kid on the block


According to Ang, the serviced apartment market in Malaysia is relatively new compared to the markets in Singapore, Jakarta and Thailand and it’s only in the last 10 to 15 years that big international brands such as Ascott and Somerset have entered the market. Among the last arriving brands to arrive is the Banyan Tree, which upon completion in 2015 will feature 51 serviced residences along with 441 units of private residences and the new 50-key hotel in Bukit Bintang.


Seven types of units will be available in one to three- bedroom configurations ranging in sizes from 1,076 to 2,184 sq ft. Residents will have access to high-end facilities and services such as a roof top with sky bar and restaurant, the Banyan Tree Gallery and Spa, infinity and children’s pools, gymnasium, function room and 24-hour security. While Kuala Lumpur has some of the lowest room rates for luxury hotels and serviced apartments in the region, the sale price at the launch of the Banyan Tree serviced apartments of around RM2000 (US$652) per sq ft, pointed to an upward trend, which is likely to continue with the on-going improvements of the city centre such as the up- grading of the city’s mass transit systems.


New moves


In line with an expected rise in demand, other high-end developments by local developers will be completed in the coming years. Another development, Angkasa Raya, located right across from the Petronas Towers, is scheduled for launch in the fourth quarter of this year, and will add another 280 high-end serviced residences to the market when completed in 2016. Face Platinum Suites, one of Kuala Lumpur’s first SoHo developments set on five acres of land along Jalan Sultan Ismail will feature fully-furnished serviced apartments in its second phase.


According to CB Richard Ellis, the average occupancy rate at selected serviced apartments was 72 per cent in the fourth quarter of 2011, an improvement from 70 per cent in the previous quarter and 66 per cent a year earlier. Average room rates per night during the fourth quarter was RM277 (US$90), a decline from the RM288 (US$94) recorded in the previous quarter. The real estate services provider further stated that the revenue per average room increased by eight per cent y-o-y, compared to the fourth quarter of 2011.


 


 


 


 




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