European serviced apartment sector to grow by 20,000 units in next five years

George Sell By George Sell
12 July 2018 | Updated 17 July 2018

UK: The European serviced apartment sector has nearly 20,000 units in its five-year pipeline according to recent research from HVS.

The survey of leading serviced apartment operators undertaken by hotel consultancy HVS, reported 2017 increases in RevPAR in London, the UK regions and across Europe.

Operators say their biggest challenge is competing against hotels for central sites, but growing demand for serviced apartments and increasing interest from investors has nearly doubled the pipeline across Europe.

The survey, published in the report The Serviced Apartment Sector in Europe: Alive and Kicking, reported that more than half of respondents are planning to open new properties in markets such as France and the Netherlands, with the US and Eastern Europe also under consideration. The majority of operators are aiming to consolidate in the markets in which they already operate, such as Germany, the UK and western Europe.

The report also revealed a move towards hotel-like ownership and management structures. The report co-author Magalí Castells, an associate at HVS London, said: "We are seeing more management and franchise agreements in serviced apartments, rather like that of the hotel sector. This is largely because these two operating models offer operators more flexibility, the ability to expand to readily and less risk. 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."

"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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