Business travellers on-the-go seen to spur growth in niche property sector.
Despite being a niche segment in a highly competitive sector, Singapore’s serviced residences industry is anticipated to expand further as evolving travelling habits point to increased demand for short, yet more frequent stays. “The serviced apartment residences market continues to evolve towards maturity in Singapore. Increased knowledge, strong demand, flexibility of the model and higher returns for this product led to significant investment in the sector in recent years,” says Govinda Singh, director, hospitality & gaming Asia-Pacific at Cushman & Wakefield.
Jastina Balen of Frasers Hospitality shares that serviced residences have been an ideal business model in Singapore for the past few years. “The serviced apartment sector has proven to be resilient even in uncertain economic climates. Serviced apartments offer a good value proposition for all types of travellers, and it is against a backdrop of austerity measures when the advantages of serviced apartments really come to the fore in meeting the needs of travellers,” she says.
For Ong Kah Seng, director at R’ST Research, the appeal of serviced residences lie in their ability to bridge the gap between mostly inflexible lease terms shunned by business travellers. “Serviced residences fill in the best gap for foreign professionals who require some stays in Singapore of about couple of months, but find that the standard one-year residential property lease is too long,” Seng explains. Hotel rooms, on the other hand, tend to fall out of favour as they are “are most functional for short-term stays and have high per-day room rates,” he says.
An evolving work culture that increasingly requires executives to be seconded to Singapore on a temporary basis, appears to be fuelling the rise of serviced residences in Singapore. “There are more senior foreign professionals who are based in Singapore, but often the foreign professionals will have to travel regionally or globally and find that a standard one-year residential property lease is too long for them to commit,” Ong says. “About half the time, the apartment could be vacant.”
Moving forward, “strong demand” is still expected for serviced residences as “businesses continue to explore growth opportunities across global markets, sending their executives on shorter but more frequent overseas assignments,” Balen notes. “As the serviced apartment sector grows, there will naturally be increased competition as industry players strive to strengthen their positions by expanding their footprint and enhancing their offerings.” Challenges, if any, will lie in operators “finding suitable sites, educating owners/developers on the attractiveness of the model, and how to mitigate downside risks when corporate travel is reduced,” Singh, for his part, says.
Who made it to SBR's list?
This year, SBR decided to remove Capri by Frasers as the largest serviced residence in Singapore since it is a special type – a hybrid of a hotel and serviced apartment. 304-unit Great World Serviced Apartments took the top spot. The list meanwhile welcomes six new entries, namely, Atas @ Orchard, Central Square, LMB Housing Services, Atas @ Oakley, Shangri-La residences, and Citadines Fusionopolis Singapore.
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