Record year in prospect for Serviced Apartment market

Thomas Beyerle's research team over at international property advisers Catella have produced an interesting report on the market for serviced apartments, that hybrid form of residential use so beloved of the professional classes when stationed in or working for a short while out of a distant city. Encompassing fully-furnished apartments with (generally) further services including cleaning, reception, catering etc. for a medium- to longer-term stay, the property class tends to cluster around central infrastructural hubs such as trade fairs, shopping centres, central office districts or train stations.

Catella point to some of the key attractions of the serviced apartment market, including: In Europe 10,500 units are currently in the pipeline, 3,500 of these in Germany alone; The average time of use is about 5 weeks; The yield corridor for the last 12 months was between 4.6% and 5.2%; and, By the end of 2018, Catella Research forecasts the transaction volume in Germany at about. €235m and in Europe between €525-575m. The only European country planning more units than Germany are the UK (4,280), followed by a wide margin by Switzerland (740), Ireland (600), and France (571).

The researchers conclude that competition in the sector is heating up, with the market being increasingly influenced by mobility and digital developments. However, other factors such as booking machines, push-notifications, “unbeatable offers” on a time-limit and the increasing short-term nature of projects in combination with increased travelling, are undeniably accompanying a structural change in our work and private life realities that favour this property type.

The Catella researchers see the market share of Serviced Apartments, currently at 3% in Germany (35,500 serviced apartments in 588 buildings) and for Europe with a global share of 14% (114,012 apartments in 1,889 buildings), as a share of the traditional hotel sector, increasing to 10% (Germany) and 25% in Europe.

In Germany, the market is being spearheaded by Berlin and Hamburg, each with 14% of the current new project pipeline, with Catella pointing to Munich, Frankfurt am Main and Düsseldorf following, and then Cologne, Hanover, Stuttgart, Leipzig and Nuremberg.

The biggest players in the German market, with a 22% total market share, are currently national providers Derang – The Living Hotels (3,060 apartments), and Apartment Residenz (1,800 units), followed by Adina Apartment Hotels (1,340), Accor (Adagio – 1,100 units) and Ascott Ltd (Citadine – 556 units).

In Europe, the largest providers based on number of apartment buildings are: Pierre et Vacances (226 buildings), Adagio/Accor (97), ResidHome& Sejour et Affaires – part of France Reside Etudes Group (65), Park & Suites (55) and Citadines/The Ascot Ltd. (40).