GSAIR 2023 : EMEA 20
EMEA Supply
Opportunities and challenges for the Serviced Apartment industry in Europe
Europe By Samuel Toribio
Europe ' s serviced apartment market has experienced remarkable growth over the past few years , driven by an increasing number of business travellers , corporates preferring apartments over hotels for long stays , and a preference for more flexible and comfortable accommodation options . Moreover , in the last 2 years , the industry has expanded its footprint from the traditional markets ( UK , Ireland , Germany ) towards Southern Europe with relevant projects in Lisbon , Madrid , Barcelona , Milan , Athens … We see opportunities aplenty for two reasons as follows :
• Broader audience
As more projects are deployed , this segment is expected to attract more clients from the nontraditional corporate sector to digital nomads , workation programs and b2b2c clients coming from self-booking tools . Furthermore , the rise of new platforms entirely focused on this audience will enable a new demand driver .
• Disrupting new markets
Second / third tier cities will be a hot spot as investors will find better deals from a yielding point of view but also uplifting cities like those mentioned above ( Southern and Eastern Europe ) will benefit from this , as the current options are limited .
Whilst these opportunities are exciting , unavoidable headwinds are being faced and will continue to provide obstacles , which the industry needs to overcome , particularly the following :
• Inflation and price increases
Recent inflation levels have had a massive effect on prices , and this has created a gap between apartment and hotel ADRs that for shorter stays was not as noticeable . Deducting extra costs ( like cleaning fees ) from the price might be a solution to make apartments “ look ” cheaper to clients .
• Alternative real estate projects
While serviced apartments have enjoyed a steady rise in popularity , they are facing stiff competition from co-livings , which have gained traction among the millennials and digital nomads . Europe is experiencing a boom on co-living projects . Quality-wise , some of them offer 40 % - 50 % cheaper rates than current city serviced apartments for premium corporate travellers .
In a nutshell , Europe has a brilliant outlook in the serviced apartment market , but BTR ( build-to-rent ) projects pose a question mark as to where the limit will be .
Middle East By Kurtis Murphy
The Middle Eastern serviced apartment market continues to grow and mature with many new openings across the region . As the region develops , product standards are evolving to appeal to a more international consumer .
In the UAE , there has long been a clear focus on attracting international inbound tourism and this continues . It is much more typical now to find businesses operating during Ramadan than it was five years ago , and in 2022 we also saw an alignment of UAE weekends with the internationally recognised Monday to Friday business week .
It is not just tourism that has driven sector growth here ; the UN Expo and COP28 are clear indicators that this region is keen to attract international businesses to establish permanent bases in the region . The UAE ’ s historically more conservative neighbours - Saudi Arabia and Qatar - are emerging as heavyweights in the sporting world ; the 2023 World Cup , Liv Golf , World Championship Boxing , the Saudi Football League are undoubtedly generating demand and interest in the region . KSA ’ s $ 500bn Neom megacity on the Red Sea coast , eventually projected to become home to 9 million people and supporting the Kingdom ’ s aim to become less dependent on oil , has already driven significant numbers of relocations to the region .
While this is all generally positive for the GCC economy , for extended stay guests and corporates , it can cause spikes in the year of low availability and higher rates .
SilverDoor Apartments has increased their portfolio by over 4,000 units over the last 12 months in growing markets across the Middle East including Bahrain , Israel , Oman , Qatar , Saudi Arabia , Turkey and UAE .
Key players have established a strong foothold in the market over the years such as Rotana , IHG , Ascott , Dusit , Millenium Hotels & Resorts and Accor ; many of whom continue to open new stock on an annual basis . Cheval Collection are also new entrants to the region with 131 rooms on the prestigious Palm .