Developers now homing in on studio, serviced apartments
See big demand from multinationals, NRIs and medical tourists
Jul 01, 2013
Source : The Hindu Business Line

 

DELHI: Real-estate players are now eyeing first-time home buyers, expats and those who come for medical treatment by offering studio and serviced apartments. Even non-resident Indians who want to park their funds in real estate seem to be keen.

With a slew of such projects under way, developers are banking on them to help generate quick cash-flows, as unlike other types of apartments, investors are not required to shell out huge amounts.

In fact, such is the interest in both studio and serviced apartments that even the Delhi Development Authority has proposed a new provision in the Master Plan 2021 for introduction of such apartments.

According to the proposal, studio apartments will be allowed to come up in residential zones, while serviced apartments will be restricted to commercial centres.

Ideal for extended business and leisure trips, serviced residences combine the comfort and privacy of a home with the services of a luxury hotel.

Two products

Serviced apartment and serviced residence are two different products. While the former is part of commercial operations and comes under the hospitality business, the latter is part of the real-estate business. While international brands such as Fraser Suites and Ascott and domestic brands Assotech, DLF, Wave and Cosmic have already entered the serviced residences category, Supertech, Jaypee and Hiranandani have made inroads into studio apartments. Private equity firm Ireo has tied up with Singapore-based Ascott to manage its Rs 400-crore serviced apartment project in Gurgaon. Ascott, the world’s largest serviced residences operator, manages about 70,000 units across about 22 countries.

According to Ireo, serviced-apartments is a growing segment with a lot of potential in markets such as Gurgaon, which see large-scale movement of business executives.

Alfred Ong, Managing Director, Strategic Development, Ascott, feels that the “the serviced apartment segment is under-served. Our Gurgaon project will have 220 serviced apartments. Of these, we have earmarked 160 for the rental pool, while the balance will be private residential apartments.”

A one-bedroom apartment comes at Rs 1.8 crore. The company said it was targeting markets that have high MNC influx and will also bring in other sub-brands — Citadine and Somerset, among others.

According to Pankaj Dugar, hospitality head at Ireo, “The rental value of serviced apartments is also growing at a steady pace. We plan to make several such investments in Chennai, Maharashtra and Goa”.

Analysts note that the booming medical tourism industry is also giving a big push to serviced apartments. Destinations such as the National Capital Region, Chennai and Bangalore have emerged as medical hubs.

For developers, too, setting up serviced and studio apartments is profitable as operational and overhead costs are lower.

Shubhranshu Pani, Managing Director - Retail Services, Jones Lang LaSalle India, says the concept of mixed-use development helps diversify the tenant mix. It also allows developers to fully utilise the floor space index and location.”

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