Serviced apartments offer good option

Professionals on the move in China are creating demand for furnished homes with customized comforts

Armed with just two suitcases, 32-year-old Jean Simpson, an account manager with a multinational bank, relocated from Shanghai to Hangzhou, some 100 kilometers away, in late August. She had no furniture, no household appliances and none of the paraphernalia that typically mark a relocation.

Simpson could travel light because in Hangzhou a serviced apartment awaited, cutting down on the need to shift belongings. Thanks to the advent of this type of accommodation, the account manager and many of like her can now relocate in China with ease.

Such apartments are fast rising in metropolises and even second-tier cities.

The demand for this type of accommodation is illustrated by the fact that by August more than 20 serviced apartment properties were added to the realty markets in Shanghai, Shenzhen, Chengdu, Suzhou and Wuxi.

Such demand has been fueled by more and more employers with operations in multiple centers. Multi-center operations these days necessitate shifts of human resources across several places. For instance, Simpson was required to relocate after being included in a staff rotation program for management trainees.

Her Hangzhou accommodation was her third home in a year. And all three were newly developed serviced apartments.

"Moving from one place to another can be a headache if you have to deal with renting a place to live and getting furniture and home appliances," says Simpson.

"The serviced apartment my employer offered is such a nice part of the welfare package that it dispelled my fear of relocation."

There are key reasons for the popularity of serviced apartments in China. Market insiders say that they fill the gap between residences on lease and hotel rooms by offering value-added services.

Also, an increasing number of young professionals and senior expats work across China today. Their expressed need is for independent residential spaces complete in all respects.

The flurry of relocations among executives, 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 the emergence and rapid expansion of the services sector.

According to John Wong, a Shanghai-based manager with Lanson Place Hospitality Management, financial, 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 property of serviced apartments in Shanghai.

Wong estimates that there are more than 250,000 hotel rooms 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. So, in terms of growth potential by numbers, it can be huge," he says.

Savills Residence aims to tap into this growth with plans to launch 355 new serviced apartments in Shenzhen in 2016 and 2017, as well as 200 units in Chengdu and 240 units in the Shanghai 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 this year, 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, says 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 spacious kitchen, says Neil Harvey, its director.

In contrast, serviced apartments in the Shanghai Free Trade Zone may offer spacious homes that can house a big family. Tenants working in the region typically bring their families.

"We leave some space 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," says Harvey.

Property managers are sparing no effort to cater to their patrons' changing and increasing demands for varied services.

Brian Connelly of Oakwood Residence Hangzhou listed the major concerns for tenants: "Environment, neighborhood, food and water safety.

"In response to increasing concerns about air pollution and water quality, our properties are installed with air filters and water filters."

wuyiyao@chinadaily.com.cn

(China Daily Africa Weekly 11/13/2015 page22)