The number of internationally branded serviced-apartments across Europe is set to expand by over 50% during the next two years.
That's according to international property advisor Savills.
It predicted that growth would be spurred by the constrained supply in key cities such as London, Paris, Frankfurt, Amsterdam and Belgium.
Singapore operators Ascott and Frasers are both planning to open sites in Frankfurt this year, and StayCity is pursuing a 30% growth in inventory with its plans to expand to 5,000 apartments across Europe by 2019, including new serviced apartments in Venice, Lyon and London.
Marie Hickey, director of research at Savills, said: "Some of the larger operators are moving away from a reliance on the traditional long stay corporate market and are tapping into shorter stay guests, particularly as businesses reliance on travel management companies wanes. As a result, developing a branded product that appeals to a variety of guest segments and which raises consumer awareness has become all the more important to operators."
James Bradley, associate director of Savills hotels, added: "This expansion of branded purpose built stock should strengthen the appeal of the sector to institutional investors and we anticipate a significant increase in capital in the next few years. However, over the short term, private equity and owner operators will continue to be the primary driver of expansion. When institutional demand does materialise we expect it to be focused on the major cities in the UK, France, Germany and Benelux."
Amsterdam is the most constrained city when it comes to the supply of serviced apartments, with 0.2 units per 1,000 overseas visitors. Paris and London are not far behind with 0.3 and 0.6 units respectively with both presenting the greatest opportunities for growth in light of large visitor numbers. Brussels and Frankfurt are better supplied markets both with 1.1 units per 1,000 overseas visitors. These numbers compare to much higher supply seen in US and Asia Pacific cities where the serviced apartment concept and its brands are more familiar to consumers. For example, supply in New York stands at approximately 5.8 units per 1,000 overseas visitors and 2.9 units in Hong Kong.