Central London’s serviced apartment market could support a 200% increase in supply.
According to Savills’ Serviced apartment market report, central London has one of the tightest supplied markets compared with other global financial centres such as New York and Hong Kong. The firm suggests that this gap could allow for up to 16,300 more units.
The analysis found that international supply rates per 1,000 visitors stand at 5.3 units in Hong Kong, 5.2 in New York, 2.6 in Sydney and 1.8 in Singapore, compared with only 1.2 units in London. Of these destinations, London has the second highest number of business visitors pa, at approximately 7,000, while New York has in excess of 10,000.
Savills highlights that serviced apartment occupancy since 2009 has averaged 87% in London and 75% in the regions – an average outperformance of approximately 580 basis points when compared with the hotel sector.
Yields for central London serviced apartments stand at 6.25%, with recent transactions pointing to prime initial yields of 4.75%, equating to 245bp above the 3.8% reported for prime central London residential property.
annabel.dixon@estatesgazette.com
