Things to Consider When Investing in Serviced Accommodation
Now more than ever, investors are looking for markets that can guarantee them strong and stable returns. Thankfully, investing is no longer restricted to the traditional buy-to-let structure. The serviced accommodation property strategy is a new and popular one and delivers excellent returns. However, there is still a lot to consider when investing in serviced accommodation. The more you do consider, the more successful your investment will be.
What is a serviced accommodation?
Serviced accommodation is a term used to describe a fully furnished, self-contained property that is available to rent for both short and long periods. A serviced accommodation may offer services similar to those provided by hotels, such as regular cleaning and access to the building’s facilities, such as the swimming pool, gym, or spa.
Although it is available for long-term lets, it is a much more popular choice for short-term lets. This type of accommodation has mostly been popular with business travellers, and it is frequently added to the ‘apartment’ category on hotel-type accommodation booking; nevertheless, serviced accommodation is much more than an apartment. They are more cost-effective than hotels and perfect for longer stays as you have access to the type of facilities you would have at home.
What constitutes a serviced accommodation?
Essentially, serviced accommodations are a ‘home away from home’. As a result, guests would expect a serviced accommodation to somewhat replicate their own apartments or houses. A serviced accommodation should include features such as:
- One or more bedrooms that are separate from the living area.
- A fully fitted kitchen including pans, plates, and cutlery.
- Tenants will usually expect a dishwasher, washer, and dryer.
- TV, WiFi, and desk space to facilitate anyone working from home.
- The costs should include electricity and water bills.
- Some would expect a frequent cleaning service too.
As you can imagine, these types of accommodations are soaring in popularity. They offer a living experience incomparable to that of a hotel. They are much more spacious, more affordable, and allow guests to be much more flexible. As a result, serviced accommodations are becoming increasingly popular with investors.
Things to consider before investing
As with all investments, there are still plenty of factors to deeply consider before taking the step into serviced accommodation.
Location: If you are renting out a serviced accommodation, the location is crucial. You need to ensure you have the best possible location for the market you want to rent to. For most tenants, they will not be looking for a touristy location. They will seek places with nearby amenities and nearby jobs.
High-quality facilities: It will help to make sure the apartment is well furnished, with high-spec facilities. Especially if someone is visiting weekly to clean and report damage, an older apartment will end up with more issues that need resolving. Also, a newly furnished apartment will instantly drive up tenant appeal for those searching for a ‘home away from home’. However, with our range of CityRise furniture packs, you can quickly equip your apartment with high-quality, stylish furniture – saving you time and money.
Connectivity: One of the big differences between serviced accommodation and a buy to let investment is its connectivity. Serviced accommodations are most popular with professionals (who often refer to them as ‘corporate lets’). Therefore, it is worth considering nearby transport links, a central location, and connectivity to the city centre.
Demand: With restrictions being lifted, it appears the days of Zoom meetings are behind us and businesses are beginning to meet face-to-face once again. As a result, demand is returning to city centres. On the other hand, the tourism industry is experiencing a rocky period of uncertainty, with many countries on the ‘red list’. Therefore, the ideal market for serviced accommodation would be corporate professionals.
There are endless positives to the serviced accommodation sector. Essentially, investors are renting out high-quality accommodations in good, central locations. Typically, research has shown that 91% of serviced accommodations are 14 nights or more. As a result, investors are more reassured of their stable income as their apartment will be occupied for a more definite period. Coupled with lower running costs, serviced apartments generally achieve much higher returns compared to other short-term lets.
If you ask us, investing in serviced accommodation is definitely a worthwhile path to go down. There is a reason the industry is booming, and the trend is likely to continue once the tourism industry gets back on track. Also, with the changing demands from tenants seeking a home and a workspace, a serviced apartment offers much better facilities than that of a hotel. As a property investment strategy, serviced accommodation has the potential to offer high returns if all details are carefully considered.
Get in touch today if you are interested in learning more.
Follow us on Instagram here for daily updates.