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London

Serviced apartments: Property investors seeing investment opportunities

High profit margin, stable cash flow and changing traveller habits driving investor appetite according to JLL


​Serviced Apartment Sector summit, london, 13th July 2016 - The rise in tourism and corporate travel and increasing knowledge of the sector’s strength, is driving investor interest in the serviced apartment sector according to research from JLL.

While private equity and institutional investors make up the majority of sector investment, it will become increasingly attractive to property investors. This is in part due to the attractive yields it offers compared to hotels and the low operational costs.
Transaction volumes in the UK have seen steady growth over the last couple of years with total serviced apartment deals reaching £325m in 2015, a 114% uplift compared to 2014.

During the first quarter of 2016, two deals took place in London, including the 77-room SACO The Cannon and 268-room Staycity Serviced Apartments & Aparthotels London Heathrow, sold for £32m and £35m respectively. JLL expect transaction levels to increase in the coming months.

In London over 1,500 rooms are due to open between now and 2019. Changing corporate and consumer habits and relative undersupply means that key UK cities also have big potential for growth. Estimates suggest that Manchester has 2.2 serviced apartments per 1,000 overnight international business travellers with the figure in Birmingham standing at 1.4.*

Max Thorne, Managing Director in JLL’s Hotels & Hospitality team, commented: “Serviced apartments are really starting to be seen as a good investment opportunity because of the high profit margin, stable cash flow, high space efficiency, conversion flexibility and lower development cost. It can also be a solution to the oversupply of residential properties. Improved product awareness and the changing need of the corporate traveller are also propelling this on to the investor radar. We are also predicting consolidation amongst operators in the sector over the next 12-24 months.”

 

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Notes to editors
*Figures from AM:PM
Attached is the latest research paper from JLL 

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.