Supply of serviced apartments, which mainly cater to expatriate residents, is expected to grow by an average 7.9 percent in Shanghai over the next five years, a leading real estate agency has estimated.
"We expect around 3,300 new serviced apartment units to enter the market over the next five years, adding to the local stock of 9,250 units by the end of 2006," Jones Lang LaSalle said in its recently released market report.
In Beijing, the property agency forecast a total of 1,380 serviced apartment units will be established over the next three years, reflecting an annual growth rate of 8.3 percent on average.
Beijing's total stock of international serviced apartments stood at 3,650 units by the end of 2006, Jones Lang LaSalle figures show.
While China's hotel boom has been well-reported with growth in revenue per available room, serviced apartments have developed rapidly over the past five years.
Revenue per available room in five-star hotels averaged an impressive 11.4 percent and 11.7 percent in Shanghai and Beijing over the past five years.
Increasing international visitors as well as aggressive expansion schemes by multinational corporations in both first and second tier cities have contributed to an ever-growing demand in the serviced apartment sector, industry sources said.
Internationally-operated serviced residences are also emerging in major cities including Dalian, Tianjin, Guangzhou and Shenzhen.
"Given the size of China's economy and relatively consistent corporate relocation policies, we expect serviced apartment development to be reflected in other major cities throughout the country," the report said.
The domestic serviced apartment sector has remained an attractive sector for international property developers as the country is receiving a growing number of overseas visitors while five-star hotel rooms remain in tight supply.
For instance, the Ascott Group, a member of CapitaLand Ltd and the largest international serviced residence owner and operator outside the United States, said it plans to triple its portfolio in China to 10,000 units by 2010, according to earlier media report.
(Shanghai Daily November 23, 2007)
