June 15, 2024

Serviced apartment prices rise as availability drops, says Situ report

Rising prices and reduced availability will make it increasingly difficult for corporate travel buyers looking for serviced apartment accommodation, according to a new White Paper by Situ.

The report looks at influencing factors in key cities and found new legislation is also impacting supply.

Here are the key findings in eight popular cities for business travel:

London

  • Housing is at a premium in many parts of the capital, with a steep rise in short-term lets through digital booking platforms. This is one factor driving up rents. 
  • Pricing has also increased in response to rising energy prices and other costs affecting the UK and Europe,
  • Availability has dropped, with many suppliers closing or selling, especially two bed apartments, according to Marlin Apartments. The provider plans to expand inventory over the next 12 to 24 months to satisfy increased post-pandemic demand for larger spaces.

Edinburgh

  • Research shows that since the pandemic there has been a reduction in the number of individuals renting out single vacation lets, but since aparthotels are exempt from the ruling, this business model may offer a tempting choice for international investors. 
  • Availability is already at a premium and there are correspondingly high accommodation prices. New regulations will add pressure on Edinburgh’s already stretched short-stay inventory during peak seasons. 
  • As in other cities, strict rules around individual short stay lets is likely to lead to a loss of product diversity overall – including the extended-stay sector. 

Dublin

  • Available accommodation for short-term travellers is at a premium in the city, with reports indicating that arrivals to Dublin grew by 33%, yet the stock of available accommodation fell by 6%.
  • As owner-operators find it more difficult to rent out their properties due to regulations, and as a result begin to move out of the sector, there will be less variety and number of different properties available for guests to stay in. 
  • This may encourage an aparthotel model with investors keen to take advantage of the ability to gain exposure to the extended-stay sector.

Paris 

  • According to the Head of European Corporate Sales at Adagio City Paris, aparthotels have been put in the spotlight thanks to the pandemic and it is more and more difficult to find availability.
  • In summary, the regulations to address short-term rentals are likely to add to existing pressure on accommodation for business travellers.

Amsterdam

  • The continual setting out of new rules is dissuading people from renting out their properties for short-term lets, which could mean less availability overall and a less diverse inventory of property in the extended-stay sector. 
  • Another factor affecting the availability of extended-stay accommodation in Amsterdam is the residence permit system, where individuals must register for stays of more than 90 days.
  • The good news for the extended-stay sector is that the Dutch government is addressing affordability and availability in the rented housing market. 

New York

  • The high demand in New York City for the short-term letting of apartments has meant that there is more profit in this for landlords than in putting the same property on the long-term rental market.
  • There will likely be more outside investment into the sector in terms of aparthotels and build-to-rent, with a lot of talk of office-conversions into apartments or hotels with schemes starting to materialise this year. 
  • The strict regulatory environment reduces both the availability of accommodation for extended stays, as well as the diversity of properties that guests can access, including the ‘local stays’ that some travellers so appreciate. 

Singapore

  • The strict licensing rules that have removed private residential short-term properties from the market has not decreased overall availability of rooms, although diversity of property type is reduced. 
  • The sector is highly professionalised and is thriving, with investment being made in hotels, aparthotels, and serviced apartment buildings. 

Sydney

  • Availability remains strong within the commercial short-term rental sector, with a preference for accommodation that allows guests to work from home and seamlessly mix work and leisure. 
  • Overall, the strength of the market does not show any sign of slowing down and, like Singapore, is driving investment into residential long-stay serviced apartments which remain unaffected by the laws that limit the short-term vacation rentals of individual properties. 

staysitu.com

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