Serviced Apartment Sector Guide 2018

Transcription

1 Serviced Apartment Sector Guide 2018 Informed Investing The UK s fastest growing hospitality sector

2 Sector overview What are serviced apartments? A serviced apartment is a fully furnished property, available for both short-term and long-term stays. This flexible accommodation option comes inclusive of all bills and provides a range of hotel-like services, such as housekeeping, reception and 24-hour customer service. There is also often a range of appealing onsite facilities, including swimming pools, gyms, restaurants and bars. 2

3 Sector overview Serviced Apartment Sector Guide 2018 Serviced apartments are a relatively new form of visitor accommodation that have existed for just over a decade. Today, they represent the UK s fastest growing hospitality sector and have been recognised as one of the most secure and highest yielding assets over the last few years (Savills). Average annual NET yields sit between 6.5% and 9.5% - higher than hotels (ASAP). As a result of the UK s popularity as a global holiday destination, ever-increasing visitor numbers and a shortage of tourist accommodation to meet the needs of modern travellers, property investors benefit from sustained demand, positive rental growth and reliable high yields. They have also capitalised on changing consumer preferences, the rise of the sharing economy and a shift in demand away from the traditional hotel sector. Total investment volumes in the UK have grown from 7.3 million in 2008 to 325 million in 2015, while the sector now accounts for 6% of hotel investment volumes - up from just 2% in 2011 (JLL). Occupancy levels overtook hotels in 2016 Longer length of stay (up to 365 days a year) ensures a more stable cash flow than hotels 3

4 The UK tourism sector Tourism is one of the largest industries in the UK. It is the country s third largest employer and has been responsible for a third of all new jobs created nationally since The sector is worth 127 billion to the economy each year - equivalent to 9% of the country s gross domestic product, and is the fifth largest export earner (Deloitte). The UK is the seventh most visited country in the world, with a record 39.9 million visits in an annual increase of 4.4% (VisitBritain). Last year was also the 11th consecutive record-breaking year for visitor spending. This demand shows no sign of slowing down, with a record 41.7 million visitors expected in 2018 (VisitBritain). The decreased value of sterling, better value for money compared with previous years and popularity of shows such as Game of Thrones and The Crown are driving overseas visitor numbers in Year Number of visits (m) Spend ( bn) ,715 11, ,755 13, ,970 14, ,173 16, ,778 15, ,888 16, ,889 16, ,803 16, ,798 17,998 UK serviced apartments transactions ,084 32,692 18,640 21,258 Millions ,377 21, ,115 22, ,609 22, ,865 25,071 4

5 The UK tourism sector Top 10 source countries by visitor spend Country Spend ( million) % of total spend 1. US 3,354 15% 2. Germany 1,490 7% In total, there were over a third more more visitors to the UK last year than in France 1,372 6% 4. Australia 1,060 5% 5. Republic of Ireland 1,059 5% 19.6 million visits were recorded from the EU Q up 4% on Spain 992 4% 7. Italy 980 4% 8. Switzerland 792 4% 3.8 million American tourists visited the UK Q a 14% annual increase 9. Holland 714 3% 10. Canada 634 3% 5

6 Domestic tourism Domestic tourism had a very strong 2017, with searches and bookings 23.8% higher than the same period in 2016 (Sojern travel marketing group). Isle of Wight This is backed up by research from Airbnb, showing that 83% of Britons are choosing to holiday in the UK this year: Top 5 reasons for holidaying domestically Less stressful than going abroad Scenery as beautiful as anywhere else So much still to discover domestically Landscapes not as beautiful abroad Cheaper to stay in the UK this year Source - Airbnb Spending by this group has risen from around 16 billion in 2006 to nearly 20 billion in Looking forward, the sector is predicted to grow by 2.9% every year until 2025 outpacing the national economy (Local Government Association). 6

7 Britain better value than ever As a result of the Brexit referendum, the pound dropped to a 30- year low against the dollar - and nearly 2 years on, it has still not returned to previous levels. This means that this ever-increasing number of overseas visitors are enjoying extremely favourable exchange rates. Enquiries to airlines and UK tourist boards have rocketed, especially from China and the US. And since foreign holidays now cost about 245 more for the average British family of four, domestic tourism is experiencing a huge upturn (Travel Supermarket). Global supply The global volume of serviced apartments doubled between 2008 and 2016 to nearly 827,000 units (Global Serviced Apartments Industry Report 2016/17). Europe has experienced a 250% increase in serviced apartments supply during this time, with 114,000 units spread across the continent. Despite this impressive growth, the supply still continues to be far from sufficient in meeting the demand from Europe s 593 million visitors. The UK market is ripe for development and has been the nation s fastest growing hospitality sector since 2014 (Savills). Supply now sits at 19,000 units - 81% higher than the figure back in The UK leads Europe s pipeline of serviced apartments, accounting for 41% of the 10,000 planned units (HVS Hospitality Intelligence). Supply of serviced apartments Worldwide 401, ,759 Europe 43, ,021 UK 10,500 19,000 Source - GSAIR Occupancy going from strength to strength UK serviced apartments averaged an 81% occupancy rate in outperforming hotel rooms at 77.2%. And with 94% of operators reporting that demand in their regions is increasing, compared to 77% in 2011, accommodation requirements continue to outstrip supply (JLL). Outside London, serviced apartments currently make up only 1.8% of rooms across the country. 7

8 Why are tourists choosing serviced apartments? There are a number of different groups that benefit from the enhanced flexibility and cost-effectiveness of serviced apartments - as well as the potential for longer-term stays. Business travellers have become increasingly reliant on such accommodation, with more frequent work-related travel on a global scale. Also, families and large groups, who often find hotels both difficult and expensive - sharing rooms with young children or forking out for several rooms for individuals is never ideal - benefit from the increased space and sleeping options present in serviced apartments. The chance to live like a local or find an affordable room in a prime location has tempted many a visitor away from hotels and into the arms of peer-to-peer apartment rental sites. 1 2 More space to play with - on average, serviced apartments offer at least 30% more space than hotel rooms of the same price Comfortable home-from-home experience - with well-equipped living rooms and kitchens, guests can really settle in 3 4 Cost-effective travel option - not only are serviced apartments more economical for families and larger groups, but with the ability to cook and wash clothes in your own apartment they also keep holiday costs down Privacy - serviced apartments generally have a once or twice-weekly housekeeping service, which is enough to keep everything spick and span without the hassle of daily intrusion that is part of the hotel experience An impressive 88% of companies are now utilising these costeffective and flexible accommodation options (GSAIR 2016/17), with overseas corporate travel expected to increase 50% between now and 2020 (PwC) 88% 50% 8

9 The Airbnb effect Airbnb is the world s leading marketplace for private tourist accommodation a sector that will represent 19% of global rental bookings in 2018 (SIG). With the number of customers in Europe expected to reach 24 million by 2020, Airbnb is increasing awareness about private home-from-home accommodation. The unique features of serviced apartments appeal to this emerging group of travellers. In terms of their market position, serviced apartments provide a bridge between hotels and Airbnb. They offer the services and facilities of a hotel, while also providing home-from-home comforts - with equipped kitchens, comfy living spaces and multiple bedrooms. Short-term rental sites are facing increasing legal opposition across the world, as cities grapple with the impact of the Airbnb boom on local housing and hospitality operators. 9

10 Investment showcase Westbeach, Devon New build serviced apartments Available from 160,000 Westbeach, Devon offers the rare opportunity to purchase a brand new beachside apartment, with proven performance levels from two operational phases. All guests and residents will have access to the property s excellent onsite facilities, including indoor and rooftop swimming pools, luxury Spa, a restaurant and fully-licensed bar. Buyers benefit from an impressive 8-10% NET fixed income for 10 years, with full leasehold ownership and flexible resale options. Contracts are tied directly to an established company and come with a 10-year build warranty NET % % NET Annual income (years 1-5) Annual income (years 6-10) Zero costs during fixed income agreement Discover more about this property 10

11 Investment showcase Ilfracombe Holiday Park Operational serviced apartments Available from 59,500 Ilfracombe Holiday Park is a well-established development in the UK s most popular tourist region. Despite its popularity among visitors to North Devon s coastal hub, our experienced developer has been upgrading every aspect of this holiday park since purchasing the site last year. This includes a new onsite management team, a full internal and external refurbishment and new facilities throughout. The holiday park boasts a prime hilltop position overlooking Ilfracombe and the Atlantic ocean, with the harbour, beach, town centre, all restaurants and bars within walking distance. Other great attractions are also just a short drive away. 10 % NET 12 % NET Immediate & effortless income Annual income (years 1-5) Annual income (years 6-10) Discover more about this property 11

12 The US has an equally thriving serviced apartments sector Lakeside Serviced Apartments Resort & Spa Rental-ready US property investment Available from $311,900 The Lakeside is our new build development of luxury serviced apartments in Orlando the number 1 US tourist destination and the most visited city in the world (Guinness World Record 2016). With America s Best Builder constructing the property and Benchmark Hospitality a top 20 US management company operating onsite, this 106-acre development was one of the 12 most anticipated US hotel openings in The Lakeside is the first destination resort in the last area of Greater Orlando with development potential. Less than 10 minutes from Disney, its excellent facilities include a fully equipped waterpark, four restaurants, fitness centre and luxury Spa. 9.4%+ NET annual income Flexible personal usage Priced at 40% below market value Discover more about this property 12

13 Why choose Emerging Property? Emerging Property provide sector-leading returns of 8-12% NET in the UK's top performing yield-driven asset classes. The handpicked method through which we select our properties ensures sustained demand in prime regional locations. All our properties are fully managed by specialist onsite teams - every detail, every day - ensuring an effortless income. SSLuxury serviced apartments & purpose built student accommodation SSExperienced developer with national award for build quality SSProven delivery of sector-high NET yields SSTransferable fixed income periods provide flexible resale options (in UK) Member of the Property Ombudsman The Property Ombudsman (TPO) is a UK government approved organisation that ensures better consumer protection for home buyers and sellers, landlords and tenants 13

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15 Informed investing Our vision is to help you to tap into the enormous potential of yielddriven UK property. We are the exclusive master agent for an award-winning property developer, with offices in the UK and Dubai and supported by a global network of agents. Our consultative approach and committed after-sales team ensure that we keep buyers informed from purchase to resale. Realise your investment goals, speak with us today Disclaimer: The vendors of Emerging Property give notice that this brochure is produced for the general promotion of the development only and for no other purpose. Receipt of these particulars does not form part of any contract; they are for guidance only and have been prepared in good faith to give a fair overall view of the property and are believed to be correct as at the date of publication. The content relating to the past and/or current performance of an investment is not necessarily a guide to its performance in the future. The value of investments or income from them may go down as well as up. Prices quoted may be based on a conversion rate when the document was created and may vary. This is not a regulated investment for the purpose of the U.K.FSMA (2000). Emerging Property Investments Ltd are not regulated by the FCA and are not investment advisers and accept no responsibility for any investment decision a client takes. Copyright All content in this document, including without limitation, logos, text, images, graphics etc are protected by copyright and/or design right owned by Emerging Property Investments Ltd. No license is granted to copy, reproduce, use or otherwise deal in Emerging Property content, including any copyright or design right work of Emerging Property.