Developers now homing in on Studio and Serviced Apartment
Real-estate players are now eyeing first-time home buyers, expats and
those who come for medical treatment by offering studio and serviced
apartments. Even non-resident Indians who want to park their funds in
real estate seem to be keen.
With a slew of such projects under way, developers are banking on them
to help generate quick cash-flows, as unlike other types of apartments,
investors are not required to shell out huge amounts.
In fact, such is the interest in both studio and serviced apartments
that even the Delhi Development Authority has proposed a new provision
in the Master Plan 2021 for introduction of such apartments.
According to the proposal, studio apartments will be allowed to come up
in residential zones, while serviced apartments will be restricted to
commercial centres.
Ideal for extended business and leisure trips, serviced residences
combine the comfort and privacy of a home with the services of a luxury
hotel.
Two products
Serviced apartment and serviced residence are two different products.
While the former is part of commercial operations and comes under the
hospitality business, the latter is part of the real-estate business.
While international brands such as Fraser Suites and Ascott and domestic
brands Assotech, DLF, Wave and Cosmic have already entered the serviced
residences category, Supertech, Jaypee and Hiranandani have made
inroads into studio apartments. Private equity firm Ireo has tied up
with Singapore-based Ascott to manage its Rs 400-crore serviced
apartment project in Gurgaon. Ascott, the world’s largest serviced
residences operator, manages about 70,000 units across about 22
countries.
According to Ireo, serviced-apartments is a growing segment with a lot
of potential in markets such as Gurgaon, which see large-scale movement
of business executives.
Alfred Ong, Managing Director, Strategic Development, Ascott, feels that
the “the serviced apartment segment is under-served. Our Gurgaon
project will have 220 serviced apartments. Of these, we have earmarked
160 for the rental pool, while the balance will be private residential
apartments.”
A one-bedroom apartment comes at Rs 1.8 crore. The company said it was
targeting markets that have high MNC influx and will also bring in other
sub-brands — Citadine and Somerset, among others.
According to Pankaj Dugar, hospitality head at Ireo, “The rental value
of serviced apartments is also growing at a steady pace. We plan to make
several such investments in Chennai, Maharashtra and Goa”.
Analysts note that the booming medical tourism industry is also giving a
big push to serviced apartments. Destinations such as the National
Capital Region, Chennai and Bangalore have emerged as medical hubs.
For developers, too, setting up serviced and studio apartments is profitable as operational and overhead costs are lower.
Shubhranshu Pani, Managing Director - Retail Services, Jones Lang
LaSalle India, says the concept of mixed-use development helps diversify
the tenant mix. It also allows developers to fully utilise the floor
space index and location.”
Author: Bindu D. Menon for The Hindu Business Line
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