Demand from companies wanting short-term accommodation – particularly serviced apartments – for overseas assignees has soared in recent years and shows no sign of abating, according Knight Frank’s 2016 Global Cities report.
Over the past seven years, the report says, the number of serviced apartments has grown by 80 per cent and now totals more than 750,000 properties worldwide, some 61 per cent of them in the US and 17 per cent in Europe. The trend looks set to continue, with the number of apartments increasing by as much as 18.2 per cent between 2014 and 2015.
The fact that demand exceeds supply puts upward pressure on occupancy levels, the authors add. Nearly three-quarters of global operators report a year-on-year increase. Given these high occupancy rates, it is no surprise that more hotels are moving into the market.
According to the report, there is a growing trend for operators to locate serviced apartments and hotels on the same site, producing savings during development and operation.
While short-term assignments are forecast to grow to more than a fifth of all international relocations in the three years to 2017, long-term assignments are expected to fall from 52 per cent to 45 per cent over the same period.
The report also notes that the availability of short-term rental accommodation is not meeting demand in many markets, such as Asia.
Tom Bill, head of London residential research at Knight Frank, comments, “For investors and landlords, there are clear long-term rewards in the world of short-term rental accommodation. Cities that embrace the flexibility of models like serviced apartments will reap the economic rewards.”