London still top dog for serviced apartment development
London remains the top location for developing serviced apartments in the UK, accounting for just under 40% of the country's pipeline.
Manchester is also popular, accounting for 25%, according to a survey of leading serviced apartment operators undertaken by global hotel consultancy HVS.
The survey, published in the report The Serviced Apartment Sector in Europe: Alive and Kicking, also reveals a growing similarity to the hotel sector with the use of hotel-inspired structures and operating models.
"We are seeing more management and franchise agreements in serviced apartments, rather like that of the hotel sector. This is largely because these two models offer operators more flexibility, the ability to expand to readily and less risk," said report co-author Magalí Castells, associate, HVS London.
"Brands with a larger inventory tend to use management agreements over leases. This shift in operating models reflects the growing importance of using more dynamic operating structures that sustain rapid expansion."
The growth of serviced apartments, and the increasingly crowded nature of the sector, has prompted some operators to revamp their brands. It has also resulted in the emergence of trendy offers such as Cuckooz Nest, with its fusion of co-working spaces with childcare, and Cotels 7Zero1 and its fitness-focused serviced apartments. Staycity has also launched a new premium brand, Wilde Aparthotels by Staycity (pictured).
The survey reveals that the top three brands in terms of European expansion are Adagio, Staycity and SACO. Adagio Aparthotels, the joint venture by AccorHotels and Pierre & Vacances, accounts for more approximately a third of the total pipeline for expansion over the next five years.
"Last year marked the true consolidation of this industry, which has now found its place in the investor community," said report co-author Arlett Hoff, director, HVS London.
"The continued positive trend demonstrates increased demand and need for this product type, as well as a growing interest from investors in this real estate asset class."
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