The trend is also gaining steam owing to the growth trajectory of the hospitality sector and the ultra-luxury realty market in the country. In turn, this unique blend of hospitality and real estate is creating a new pool of investors and target groupsluring more and more developers to venture into the segment. From home-grown Chintels to Toronto-headquartered Four Seasons, from Kolkata-based Cygnett to global hospitality behemoths such as Marriott and Hyatt, several players are vying for a share of the growing serviced apartments space in India. One of the pioneers, however, is Taj Hotels Resorts & Palaces, which launched its Taj Wellington Mews Luxury Residences project in 2004. This marked its entry into the serviced luxury residence space in the country. In 2005, global leader Ascott made its entry into India with serviced apartments in Chennai, with a second foray in Bangalore. Currently, it is building serviced apartments in Gurgaon for which it has tied up with Ireo, a Gurgaon-based developer.
Although serviced apartments have been around in one form or the other for some time now, the concept works better in the current context in India and, more particularly, in metros and tier-II cities, say experts.
But whats in store for the consumer Serviced apartments are more cost-efficient because their rates are typically lower than those of hotel rooms. These residences also offer such rates for long-term stays, which often translate into discounts.
Space is also a benefit. A group of travellers can share the cost of one apartment and live together. Most apartments offer more than one bedroom, which can then be occupied by more than one renter. Additionally, renters have the convenience of having access to a private, fully-equipped kitchen, where they can cook their own meals.
When it comes to services, developers offer an array of facilities, including airport transfers, babysitting services, car rental arrangements, car wash, delivery from restaurants, grocery delivery services, housekeeping, mail and courier services, 24-hour maintenance, pet walkers, sight-seeing tours, travel arrangements, etc.
Serviced apartments are the emerging trend in the corporate hospitality sector. Often, the executive traffic of many MNCs and domestic companies is too erratic to justify a stand-alone company guesthouse. Also, the needs of such business occupants are very different from those of usual hotel occupants. Serviced apartments, which invariably offer a suitable four-star service and facilitation level, are the natural choice, says Santhosh Kumar, CEO-operations, Jones Lang LaSalle India.
With the concept fast catching up in India, expats, who prefer a home away from home over hotel rooms, are increasingly opting for serviced apartments in the country.
Besides expats and high net-worth individuals, who frequently travel to other cities, a new category of consumersyoung entrepreneurs and single professionals, who do not mind indulging in a bit of luxury with an extra cost attachedis emerging, says a spokesperson of Wave Infratech.
Among all categories of offerings, serviced apartments have a smaller market share in comparison to budget hotels or mid-scale hotel properties, says Sachin Sandhir, MD, RICS South Asia. This is because hotel chains have been associating more with regional developers due to the bigger players suffering huge losses and moving away from the hotel business. Some of them have already sold their properties. As the demand is growing for mid-scale properties and budget hotels, the developers and hoteliers are launching these facilities to fill the gap created by budget hotels and luxury hotels, he adds.
While the price differs according to the project, its location and also the value of the associated hotel brand name, on an average, it may vary in the range of 30-35% between branded and non-branded projects, says RK Arora, CMD, Supertech.
There are also many developers who have started providing these services on their own without any tie-up with a hotel chain, and this turns out to be cheaper.
However, many developers like Brys Group, Lotus Green and Wave Infratech are looking at tying up with a hotel chain since a hotel chains brand name adds value to the project.
Navneet Gaur, director, Brys Group, an NCR-based developer, says, While the product and the name of the hotel brand are key to selling, developers are also conscious of the market reality. Our focus on the hospitality business is as much as on the real estate vertical. Moreover, since this is the super-luxury segment of real estate, we have to service the real estate projects as a thorough professional hospitality group as well. We ensure that residents enjoy a lifestyle that will complement their stature.
There is also a different segment of buyers who are investing in serviced apartments as a second home in tourist destinations. Places such as Goa, Himachal Pradesh and Kerala are seeing a good influx of serviced apartment operators. Sushant Muttreja, MD, Cosmic Infrastructure, an NCR-based developer, says, For the rest of the year, the apartments/villas are put on rent. Those interested in such projects are either investors or second- or third-time home buyers. Only those projects will sell that are located in either a tourist destination, have some religious significance or are close to a business/commercial district.
Vidur Bharadwaj, director, The 3C Company, which has a tie-up with Four Seasons, says, We partnered with Four Seasons in 2011 to offer northern Indias first Four Seasons hotels and private residences. Our association was sealed with an exclusive agreement for 25 years. The overall response from the marketplace has been excellent. As of today, a sizeable part of the project are sold out, which reflects the high degree of buyers interest in such projects.
Developers are also coming across requests for customising the apartments. Arora of Supertech explains, Buyers are showing an interest in exclusivity and high-end specifications coupled with designer fit-outs and high-tech gadgets of global standards. With growing aspirations and increased income levels, they now want products that are different and can accentuate their status as well.
An offshoot of the concept of serviced apartments has been concierge services, which have received a good response in the market. Sighting the demand, we launched our concierge services at Amantra, Mumbai, as part of the newly-launched AUM Tower. Being a first-of-its-kind initiative in Thane, we have received an overwhelming response from consumers. Ranging from domestic chores to official work, everything is handled by concierge service providers. Also, things such as payment of electricity bills, taxes and booking of train tickets, etc, are taken care of by them, says Brotin Banerjee, CEO and MD, Tata Housing Development.
The road ahead
The concept of serviced apartments is now evolving from the previous three-star to a five-star format. Also, where only individual flats were previously involved, whole buildings are now being converted into serviced apartment blocks. In fact, serviced bungalows are a fast-emerging trend in this industry, as well.
But analysts sound a word of caution to developers about the boom. Rami Kaushal, head, consulting and valuations, CBRE south Asia, says: Since the cost of real estate in key markets is prohibitively high for hotel development, it bodes well for the developer to construct serviced apartments and keep his construction costs under check. Further, the operational costs are relatively lower than hotels and, as such, are an economically viable option for markets where such demand exists. Looking at these benefits, many real estate players are taking advantage to offer a new kind of hospitality development to consumers. However, developers should be cautious in terms of the right product to enter the market with. If this is not kept in mind, then it might go against their interest and good faith.