Knight Frank report highlights growth of serviced apartment market

George Sell By George Sell
22 April 2016 | Updated 26 April 2016

UK: Knight Frank has revealed the growth of corporate serviced apartment use in its 2016 Global Cities report.

Tom Bill, head of London residential research at Knight Frank, says in the report: "The number of serviced apartments in the world has grown by 80 per cent since 2008 to about 750,000, according to a report by The Apartment Service, a global provider of short-term accommodation. North America still accounts for 61 per cent of the world's serviced apartment locations, followed by Europe (17 per cent), Australasia (11 per cent) and Asia (5.5 per cent). The fastest-growing markets in 2015 were Europe (up 42 per cent on the previous year), Africa (34 per cent), while the number of serviced apartment sites in Asia and the Middle East grew by 31.5 per cent. North America increased by a more modest six per cent."

Bill goes on to highlight the increased use of serviced apartments by corporate travellers: "One way companies have become more conscious about costs is to increase their reliance on short-term assignments and use serviced apartments rather than hotels during the initial stages of a relocation. Some 63per cent of companies reported increased pressure to reduce assignment costs, according to a 2015 report by Brookfield Global Relocation Services. Staying in serviced apartments saves employees making trips to scope out an area before they relocate full time. And, unlike with hotels, extra costs like food and laundry do not tend to build up quickly."

Bill goes on to say there are two compelling factors driving global demand for short-term rental accommodation: "First, companies have become more cost conscious after the financial crisis and are curbing the expense and altering the nature of overseas assignments. Second, there is a new generation of younger employees used to more flexible business and leisure travel, which is encouraging companies to deploy people around the world for shorter periods. However, short term lets supply is struggling to match fast growing  demand in many established markets, for what is a relatively new form of accommodation. It is a situation compounded by the fact that short-term lets often fall into a legal grey area, despite the rise of online providers like Airbnb. The combination of a supply shortage and a fluid regulatory landscape means those cities that embrace the short-term rental model stand to reap substantial economic benefits."

To read the rest of Bill's report click here.

www.knightfrank.com

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