Serviced Apartments – A Growing Trend in India

While apartments and villas are the most common type of housing options known, people are increasingly becoming aware of the concept of serviced apartments. Serviced apartments offer several advantages both for the tenant as well as the owner. As such, the country’s serviced apartment industry is witnessing a growing trend.

Serviced apartment – what is it?

Serviced apartments are essentially furnished apartments with general amenities for daily use, available for rent. They are equivalent to hotel rooms, albeit less expensive. While one can look at renting out a serviced apartment either for a short or long-term stay, the facility is generally used for a short-term stay. Serviced apartments offer privacy, more space, convenience and facilities for cooking your own food.

An owner has the advantage of continuous cash flow. As a serviced apartment offers both long and short-term stay, one can rent it out for a regular long-term tenant, or for someone who is looking at short stay of few weeks or months. While the rental yield of a normal residential house is about 3-4%, an investment in a service apartment is known to give annual returns in the range of 9-14%.

Growing trends in the industry

The serviced apartment saw a boom with the international travel becoming cheaper as well as the sophistication level of international travel getting better. However, the trend is also picking up amongst non-travelers, corporates and people who look at a short-term stay. Moreover, many Indian corporations are switching over to serviced apartments to offshoot accommodation costs. Many people are becoming aware of the availability of short-term stay option at a cost cheaper than that of a hotel.

Till recent years, individuals and hotels used to be the major players in the industry. However nowadays, several developers are offering this choice for home buyers. The concept of serviced apartments is already popular in cities such as Bangalore, Mumbai, Delhi and Pune. It is now slowly making an entry into other smaller cities as well such as Visakhapatnam,

There are certain challenges for the industry, which include lack of proper grading and classification system for these apartments as well as lack of focused players. However, with more people becoming aware of the benefits the serviced apartments offer, the industry can expect an enormous growth.