News clip/Achieving Suite Success

the following is available from Jones Lang LasSalle's

Jones Lang LaSalle releases white paper on serviced apartments.

The growing significance of the serviced apartment market over the past few years has made it a unique segment in Hong Kong’s real estate industry. As the sustained leasing demand helped safeguard the rents of serviced apartments from falling drastically after the financial crisis, the growing investment demand has lured institutional investors to the business, which also saw the emergence of chained operations in the market. In its white paper titled ‘Serviced Apartments – Achieving Suite Success’, Jones Lang LaSalle discussed some of the key factors in forging a successful project in the serviced apartment industry.
The rising potential for serviced apartment operations has led to the emergence of chained operations in Hong Kong in recent years. However, some of the newer chained operators have never specialised in serviced apartment management. In some cases, the smaller serviced apartment operators do not see real estate and hospitality as their core businesses. ‘Ideally, a serviced apartment should be professionally run by trained management teams who are in the best position to add value to both the properties and services,’ said William Lai, Head of Property Management, Hong Kong, at Jones Lang LaSalle.

‘In order to deliver prompt and quality services to residents at all times, the operator needs to have specialised serviced apartment task forces. The team should form a good combination of qualified professionals who are experienced in serviced apartment operations, hospitality management, property management, serviced apartment marketing and leasing, health and
safety planning, and relevant procurement services,’ added Lai.

The ability to capture the attention of prospective tenants is critical for a scheme’s success. The usual method of differentiation for most schemes is through the provision of modern facilities and quality in-house amenities and services as these often help distinguish some schemes from their competitors.

Serviced apartments are actually no different from other types of properties as location remains as one of the key considerations during apartment selection. Projects in close proximity to the CBD areas and conveniently connected by transportation will always be preferred by tenants and generally enjoy strong competitive advantage over their competitors.
‘A well-planned unit mix is fundamentally important to a scheme’s success. The units should be appropriately sized to best match the physical needs and housing budgets of tenants. A pre-development consultancy study will provide landlords with a clearer picture of the demand and supply situation for any geography and market segment, and help them at the same time to make strategic decisions in terms of the development mix and market positioning,’ remarked Anne-Marie Sage, Regional Director of Residential Services, Hong Kong, at Jones Lang LaSalle.

In addition, professional marketing and leasing services are vital to the success of any serviced apartment scheme. ‘The ideal marketing professionals for such schemes are those who have strong background in corporate residential leasing and tenancy management due to their valuable experience in domestic leasing and tenancy matters and their well-connected corporate clientele,’ Sage continued.

With the global trend towards labour mobility and business process outsourcing, there is an increased need for short-term to medium-term accommodation for project-based staff travelling around the world. As a gateway to the Mainland, Hong Kong has
been benefiting from the immense scale of commercial activities due to its high number of mobile workers. ‘These trends will unlikely be reversed in the future. MNCs will continue to chase high business flexibility and more effective costing,’ said Marcos Chan, Head of Research, Greater Pearl River Delta, at Jones Lang LaSalle.

While the demand appears to be promising, the strong business case will also continue to entice more investors to enter the competition. ‘It is difficult to accurately gauge the future supply of serviced apartments as new schemes can randomly come out of existing building conversion, hotel room packaging or as simple as portfolio landlords bundling some kind of housekeeping services with their ordinary residential flats. In many cases, no pre-approvals of any kind are needed. This ambiguity will leave investors and operators with an agenda to formulate the best development, marketing and management strategies for their
serviced apartment schemes in order to stay ahead of the competition, concluded Chan.

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