Gulf sees ‘boom in serviced apartments’ – Colliers
Serviced apartments remain a relatively new concept in much of the wider region, real estate consultant says
International operators should consider tapping into the growing demand for serviced apartments in the Middle East and Africa, after a “boom” in the market in the Gulf, a report by Colliers says.
Dubai currently has the largest supply of serviced apartments in the region, at approximately 29,000 rooms across 232 properties. Out of this figure, over a third (36%) is managed by international brands.
Outside the UAE, Riyadh follows with about 5,500 serviced apartment rooms (129 properties). Only 2% of that stock is managed by international brands, Colliers said.
“We have seen a boom in serviced apartments in the more mature markets of Dubai, Abu Dhabi and Doha where it currently exceeds 35% of total serviced apartment supply,” commented Filippo Sona, head of hotels for Colliers International in the MENA region.
Serviced apartments remain however a relatively new concept in the rest of the region where it is often “an afterthought”, with residential buildings being converted into serviced apartments during or after construction.
“Further scope exists for developing larger, more efficient, purpose-built properties that follow international operating standards,” Sona said.
Colliers’ research indicates that demand for serviced apartments is no longer driven by just long-stay guests, like expatriate families who are relocating. Short-stay guests are also increasingly opting for serviced apartments, Sona noted. “In order to attract this sizeable market away from hotels, serviced apartment operators need to ensure that they are offering the highest levels of cleanliness and service, while also offering value to their guests.”
According to travel and hotel data specialist Olery, internationally branded serviced apartments in the Middle East achieved a higher scoring on service provided than three-, four- and five-star hotels, going by guest reviews. The results were determined after analysing 140,000 reviews on various hospitality properties within the region.
As of August, internationally branded serviced apartments were also found to consistently outperform unbranded, locally branded and regionally branded properties in the region in each of the scoring segments: room rating, value, service, location and cleanliness.
“As a business model, serviced apartments carry less risk that hotels – typically achieving higher occupancy rates and suffering less from seasonal swings. We anticipate that this sector will continue to grow in popularity in the region, and expect that in the next few years we will see an increasing number of global hotel brands moving into the space,” Sona concluded.
