Thousands of new-age flats set to rise in metros and second-tier cities as demand explodes
Armed with no more than just two suitcases, 32-year-old Jean Simpsons, an account manager with a multinational bank, relocated from Shanghai to Hangzhou, some 100 kilometers away, in late August. No furniture, no household appliances, no paraphernalia that typically mark a relocation.
She could do so because in Hangzhou, she moved into a serviced apartment that obviates the need to shift bag and baggage.
Thanks to the advent of serviced apartments, Simpsons and many of her ilk are able to relocate from one place to another in China with ease these days.
Such apartments are fast rising in metros and even second-tier cities. The demand for, and the popularity of, serviced apartments is illustrated by the fact that by August this year, more than 20 properties of serviced apartments were added to the realty markets in Shanghai, Shenzhen, Chengdu, Suzhou and Wuxi.
Such demand has been fuelled by more and more employers with operations in multiple centers. Multi-center operations these days necessitate shift of human resources across places. For instance, Simpsons had to relocate after being included in a staff rotation program for management trainees.
Her Hangzhou flat was her third place of dwelling within a year. And all three were newly developed serviced apartments.
"Moving from one place to another could be a headache if you have to deal with renting a place to live and getting furniture and home appliances. The serviced apartment my employer offered is such a nice part of the welfare package that it dispelled my fear of relocation," said Simpsons.
Reasons for the popularity of serviced apartments are not far to seek. Market insiders said serviced apartments fill in the gap between residences on lease and hotel rooms by offering value-added services to tenants.
That's not all. Increasing number of young professionals and senior expatriates alike work across China these days. Their expressed need is for independent residential spaces complete in all respects, with some bonus services thrown in.
The flurry of relocations among the working class, which is spawning a boom in serviced apartments, can be traced to brisk growth of regional economic hubs in recent years. For instance, Shanghai, Beijing and Guangzhou have seen emergence and rapid expansion of the services sector.
According to John Wong, manager with Lanson Place Hospitality Management Limited, financial services, trade and legal services have exploded on the scene like never before, creating unprecedented demand for decent residences from professionals. To meet such demand, Lanson Place has just opened a new property of serviced apartments in Shanghai.
Wong estimates that there are more than 250,000 hotel rooms in China that can accommodate short-term visitors to Shanghai, Beijing, Guangzhou and Shenzhen. But when it comes to those who work in China for a few months or even a couple of years, the existing serviced apartments are simply inadequate to meet their demand. "In Beijing, there are some 4,000 units of serviced apartments. So, in terms of growth potential by numbers, it can be huge," said Wong.
Small wonder, Savills Residence is planning to launch 355 new serviced apartments in Shenzhen in 2016 and 2017, 200 units in Chengdu and 240 units in Shanghai's Free Trade Zone area.
Similarly, Suzhou and Hangzhou are also seeing new serviced apartments come up as the two cities aspire to become hubs of regional headquarters of multinational corporations.
In Suzhou alone, some 100 serviced apartments spread over 50,000 square meters have been completed in the first half of 2015, according to data on fang.com, a housing services information platform.
Such huge investments in relatively smaller cities are driven by the fact that tenants of serviced apartments in China tend to span a wide range, in terms of age, family size, lease term and demand for services. They think nothing of relocating to cities other than traditional work destinations such as Beijing, Shanghai and Guangzhou. And they all care for classy conveniences and customized comforts. This is pushing developers and management teams of serviced apartments to adjust their strategies, said market insiders.
For instance, Savills Residence's new properties like those in Shenzhen tend to be smaller as many tenants are young, single professionals who do not need three bedrooms or a very spacious kitchen, said Neil Harvey, its director.
In contrast, serviced apartments in Shanghai's Free Trade Zone may offer spacious en-suites that can house a big family. Tenants working in the region typically bring their families together.
"We leave some spaces in serviced apartments for tenants to decorate for themselves because everyone has his or her own taste and interests. In this way, a serviced apartment is no longer a rented space but a home with a personal touch," said Harvey.
Property managers are sparing no effort to cater to their patrons' changing and increasing demands for varied services.
"Environment, neighborhood, food and water safety are major concerns for tenants. In response to increasing concerns about air pollution and water quality, our properties are installed with air filters and water filters," said Brian Connelly of Oakwood Residence Hangzhou.
