Are serviced apartments becoming the norm for business travellers in Asia?

The concept of a luxurious and sophisticated apartment in the heart of the central business district, with cleaning services and access to high-class facilities and amenities is nothing new, but recently the service apartment, with its superior features and lower costs, is increasingly becoming the norm in Asia.

Thailand’s property outlook, for example, continues to remain very healthy, especially in the residential housing market and the office building sector. According to international property analysts CBRE, their second-half forecast for 2006 and a recent article in the Bangkok Post predicts: “The serviced apartment market in downtown Bangkok is expected to improve in the second half due to rising demand as reflected by the continued increase in number of expats. The rising number of expatriates in Thailand is boosting the demand for serviced apartments, especially in the mid-priced segment.

The Bangkok Post highlighted the increase in foreign nationals holding work permits this year: “According to the Alien Occupational Control Division of the Departments of Employment, the number of expatriates holding work permits in Bangkok totalled 64,352 as of May 2006, up 16.1% year-on-year.”

Theerathorn Prapunpong, associate director of leasing of residential leasing services for CBRE, said that most expats tended to rent rather than buy property in Bangkok because Thailand would be only a temporary posting for two to three years.

“The largest growth has bee in the Japanese community, which now accounts for 22% of foreigners with work permits in Bangkok,” he said.

Many of the new expats working in Bangkok were in mid-management or technical positions with mid-range housing allowances. “Therefore the bulk of expatriate demand will be for the mid-range market,” he said.

During the last 12 months, 463 apartments and 2,393 condominium units were contracted in Bangkok’s central business district (CBD) alone, which is the most popular location. And CBRE predicts that 850 new apartments and 13,100 condo unit6s will be constructed in the central areas in the next two years.

According to a recent report from James Lang La Salle on the Australian market: “Further supply additions in the form of serviced apartments are expected to have an impact on occupancy levels in this market. We predict that the higher standard of product will see rate growth continue to increase by approximately 3.0% per annum.”

The sector is booming, largely at the expense of the traditional hotel industry, with one decisive factor contributing to their success and growing popularity: cost effectiveness. Serviced apartments are generally much cheaper than hotel rooms and, when you consider how much more space a guest is getting, they offer excellent value for money.

Neil Simmons, formerly of CB Richard Ellis, and co-director of leading Bangkok real estate agent Soho Properties, said: “Typically, executives stay in temporary hotel accommodation where they feel isolated. The serviced apartment is changing all that.”

Up until recently, business travellers had little choice but to rely on familiar and indistinguishable hotels. Martin Haywood of IPC Consulting said: “My company has always relied on hotels for accommodation, which felt restrictive. Every night I had to battle with the tedium of pre-conceived surroundings and a predictable menu.” Now, with the emergence of the serviced apartment, a new alternative has been created for those who do not want to stay in hotels or commit themselves to private property rentals.

It has been a particular problem in Asia where there is a high proportion of expatriate personnel who are highly transient, moving between capital cities and factory sites, spending only days at a time in their Asian home-base. There is an increasing tendency for businessmen to lean towards the serviced apartment where they enjoy the freedom to work, entertain, cook, sleep and relax as they would in their own home. It's a break from hotel rooms and travelling.

Serviced apartments are furnished properties with bathrooms, living rooms, fully-fitted kitchens and bedrooms. Most have daily maid services and nearly all have a 24-hour concierge and provide in-house maintenance. As such, serviced apartments provide a home away from home and are designed to make any period of time away as comfortable and homely as possible.

They are designed for the individual and their family who want high-quality living in short-, medium- and long-term stays, with a choice of rooms ranging from studio apartments to large 4-bedroom deluxe penthouses. In short, serviced apartments are ideal for people who enjoy catering for themselves and their own space.

This is not say there are not drawbacks to the business. As Mr Simmons points out: “Even though the serviced apartment industry has massive potential and will expand rapidly over the next five years, a cultural change is needed first. We have yet to see a large swathe of decision-makers adapt to the corporate housing market of lower-cost accommodation.

“One thing that is changing this is the emergence of a small number of global and regional online booking websites. This is helping to expand people’s awareness of the serviced apartment industry, particularly websites that offer transparent cost comparisons and immediate bookings, such as www.serviced-apartment.net.”

His co-director, Chris Heath, succinctly weighed in the advantages: “Choosing a serviced apartment allows businessmen to easily choose a suitable location, primarily in the heart of major cities in Asia, with a broad range of services, such as broadband internet, fully-equipped kitchens, private parking, international cable and plasma screen televisions, maid room, daily cleaning and linen services, international cuisine, swimming pools, health clubs, spas, a lounge, conference rooms and much more, all within a relaxing and elegant environment.”

One example of luxury living in Asia is The Ascott, which has a range of five-star serviced apartments in most capital cities in the region. Jacinta Teo, the Director of Sales, Indochina, commented: “We offer luxurious and spacious private apartments, complemented with comprehensive world-class services and facilities, ideal for corporate housing. This, coupled with the convenience of being located in a capital’s business and commercial district, next to embassies, shopping districts, restaurants and nightlife is increasing becoming a popular alternative.”

The benefits of the serviced apartment has a way to go before it is universally recognised as the corporate accommodation of choice, but its benefits are certainly starting to make an cultural impact in and around Asia.