Globalisation has made the world’s population increasingly mobile and, as has happened since the dawn of civilisation, movement gravitates towards places that offer new resources and opportunities. Consequently as numbers of people rise, there is greater demand for shelter.
This universal truth seems to be reflected by the boom of serviced apartments in Asia. As the region continues to show significantly more robust growth than Europe and the US, new investment continues to expand this economic “New World”, creating demand for the talent that is needed to make new ventures grow.
These high flyers often stay for many months, and often they do not know where they may be sent next. Signing a lease for a residential apartment would mean being locked down for at least a year or two, which does not work for this type of businessman. Many hotels offer long-stay packages, but they lack the sense of home, so a serviced apartment is the best option for this crowd.
Flying high in the Far East
In the past two years or so, major metropolises in the region such as Hong Kong, Shanghai, Singapore and Bangkok have seen an influx of new serviced apartment blocks. These properties include ones opened by international brands such as Frasers and The Ascott, as well as local brands.
“We see potential in China, India and Southeast Asia. There is strong demand for quality accommodation in these markets due to their economic growth and high foreign investment,” says Lee Chee Koon, The Ascott’s deputy chief executive officer and managing director for North Asia. “In China, besides expatriates and foreign business executives, an increasing number of domestic business travellers are staying at our serviced residences,” he adds.
The Ascott currently operates some 8,000 apartment units in 42 properties across 17 cities in the country. It has three brands, with Ascott properties being the premier line, Citadines catering to “savvy, independent travellers who want the flexibility to pay for the services they require”, and Somerset options suitable for those with families due to their children-friendly facilities.
Other than primary hubs such as Shanghai, Beijing and Guangzhou, the company is also establishing a presence in second-tier cities where strong economic growth is expected to remain strong with abundant new business opportunities. “We recently clinched a management contract for our first serviced residence in Xiamen, Citadines Jinshang Road Xiamen, which is slated to open in late 2012,” says Lee.
Shama, by Thailand-based ONYX Hospitality Group, is another player in the sector with strategies to expand in China. It has properties in Hong Kong, Shanghai and Dalian, where there are thriving manufacturing, IT, automobile and chemical industries. Next year it plans to open a property in Hangzhou, followed by its fifth Shanghai property the following year.
“We will keep expanding throughout the Chinese mainland, especially in second-tier Chinese cities such as Chengdu, Dalian, Hangzhou, Suzhou and Tianjin, which are showing the most growth potential,” says executive director Elaine Young. Being a Special Administrative Region, Hong Kong is a beneficiary of the booming Chinese economy. “Hong Kong, as a gateway to China, attracts expats and business travellers to the city when they plan to develop business in China,” adds Young.
In fact, because of the territory’s continued common law tradition after the handover, multinational companies still prefer to establish command centres here for their operations on the mainland – and that draws talent in.
“Job opportunities [in Hong Kong] will always be attractive given the market over the border,” says Pilar Morais, chief executive of local serviced apartment brand CHI Residences. The group has properties in neighbourhoods like Sai Ying Pun, Jordan and Yau Ma Tei, which are slightly “off centre” but are still only a short cab ride or a few stops away on buses or the train from major districts such as Central and Tsim Sha Tsui.
“Corporate budgets are tightening so alternative accommodation options need to be considered. Serviced residences outside of the usual Central/Mid-Levels/Admiralty area are within budget, while still remaining convenient with easy access to transportation systems,” says Morais.
But the cheapest offering in the group’s portfolio, a 27 sqm studio at CHI 393 in Yau Ma Tei, still starts from HK$16,000 (US$2,062) per month, which rivals the long-stay rate offered by some three- or four-star hotels. However, you do get a kitchenette on top of all the usual modern amenities such as flatscreen TV, free wifi, a business centre and housekeeping, and CHI properties are also pet-friendly.
Service on the subcontinent
The subcontinent is another region being eyed by serviced apartment operators. “In India, the shortage of international-class accommodation presents opportunities for Ascott to tap the unmet demand from foreign and domestic travellers,” Lee says.
The Ascott entered the India market with Citadines Richmond Bangalore, a 96-unit property located in the CBD that features studios and one- and two- bedroom apartments. The group has six other properties in the pipeline across the subcontinent, with one each planned in Ahmedabad and Hyderabad and two properties in Bangalore and Chennai. Somerset Greenways Chennai has already opened, and the remaining five properties, with a total of more than 1,100 units, will be rolled out over the next three years.
One trend that is emerging in this new wave of serviced residences is the growing demand for mid-range offerings. While there is always a place for high-end properties such as the resort-style Hong Kong Parkview and Pacific Place Apartments located in Hong Kong’s Admiralty district – whose 113 sqm to 246 sqm suites remain the reserve of high net worth individuals or tenants in the adjacent A-grade office blocks – new demand has clearly emerged from companies tightening their belts or smaller businesses seeking to expand in Asia.
Making a home from home
Big or small, what modern serviced apartment operators all emphasise is their understanding of expatriates’ needs. Relocating to another country can be stressful, especially when it’s one where everything from the culture to the law is very different.
Lanson Place Hospitality Management, which operates serviced residences in Singapore, Kuala Lumpur, Beijing and Shanghai, as well as a hotel in Hong Kong, has interviewed its guests for a picture of what newcomers face. “We found that residents, having arrived in a different cultural environment, are excited about the move but are also full of questions about living without friends and workmates, not speaking the same language, where to shop, how to settle their kids, and they are especially concerned how the above might influence their work,” says Winnie Poon, marketing communications manager.
To tackle that issue, Lanson Place properties organise parties and local tours for their residents, while Shama organises activities such as cooking classes, Chinese festival celebrations as well as “hood tours” to help tenants get to know their new home. CHI, on the other hand, employs technology, with its units installed with an integrated communications system that contains neighbourhood guides with a “click-to-call” option for making bookings at restaurants, appointments at clinics or health spas, and finding out about shops. The group is also addressing a concern that many expatriates in Asia are concerned about: air pollution. It has partnered with local company Ovyvital, which produces air filtration solutions, to install systems in the rooms that promise to “wash out” all the pollutants.
It used to be most people’s dream to secure the job of a lifetime, buy a house and settle down. But for the upwardly mobile today, success is defined by being in the right place at the right time, and in today’s terms, the place is Asia and the time is now. Luckily for these global citizens, there are always people out there ready to offer them a home.
Other new offerings in Asia-Pacific
Hotel group Kempinski has opened THE ONE Executive Suites in Shanghai, adding to a portfolio that covers Beijing, Jakarta, Bangkok, Doha, Dubai, Istanbul, Geneva and St Moritz. Located in the key district of Jing’an – where a slew of mega commercial-retail projects are on the rise – this property features 224 units. Suites come in one-, two- and three-bedroom configurations – with the largest category at 300 sqm – and boast heated floors for winter and balconies. There are currently two dining options on the premises.
Oakwood Serviced Apartments plans to open its second property in Guangzhou – the 225-unit Oakwood Premier – in the second quarter of this year. The property is located in the premier business district of Tianhe and is close to the East Railway Station, where the train from Hong Kong stops. Products include studio, one-, two-, three- and four-bedroom units ranging from 50 sqm to 230 sqm, with each featuring a fully equipped kitchen, wifi internet access and a home entertainment system with a flatscreen LCD TV, DVD player and an iPod docking station, in addition to standard amenities such as a washing machine and dryer. The property also offers a restaurant, bar, gym, meeting rooms, swimming pool, a spa by Banyan Tree, a Residents’ Lounge and a children’s play area. The group’s other operation in the city is the Oakwood Gold Arch Residence, located on Er Sha Island. www.oakwood.com
Hong Kong-based Ovolo, after opening its seventh property in its home base last April, goes international this year by acquiring the former Somerset Gordon Heights in Melbourne from The Ascott. The group plans to refurbish and rebrand it into Ovolo serviced apartments. Located on Little Bourke Street in the city’s central business district, the property consists of 43 units, including studios and one- and two-bedroom apartments, which can be rented out on either a daily or monthly basis. The group is aiming for a mid-2012 opening. www.ovologroup.com