The trend of serviced apartments that started more than a decade-and-a-half ago in Chennai has been growing at 10-15% each year. Business executives who come from around the world on short-term assignments, tourists visiting hospitals for long-term procedures along with family, NRIs coming during year-end for the music festival season, and students from foreign universities on field visits — serviced apartments cater to them all. Looking at the growing demand, players in this industry are now offering what they call ‘luxury serviced apartments’ with premium facilities. Some of these apartments even offer space for mini conferences and are pet-friendly considering most hotels don’t accommodate pets.
Though this specific category has no data pertaining to the number of players, real estate developers point out that luxury serviced apartments yield good returns. Instead of keeping high-end apartments idle and unsold, many are giving a few rooms to online aggregators and brokers who let these out for a period varying from a few days up to some months. When given on rent, the same room (roughly 900 sq.ft. and above) will fetch a rent of ₹25,000-₹30,000 a month. This depends on the location, whereas a luxury serviced apartment would easily fetch ₹5,000-₹6,000 a day. Currently, a high-end hotel room in the city would cost anywhere between ₹8,000 and ₹13,000 per day.
Many developers especially in the outskirts of Chennai are silently giving away a block of their property for luxury serviced apartments. More recently, a firm called Aarin Hospitality launched Apartel Oragadam, a luxury serviced residence in partnership with Hiranandani Parks. The property has two and three BHK apartments, ranging from 1,700 to 2,000 sq.ft. Samvel Sathyan, CEO and Executive Director, Aarin Hospitality, says, “We are committed to establishing a strong presence across the country, starting with Chennai, Bengaluru and Hyderabad, where the demand for premium serviced residences is high.”
“With the changing dynamics of consumer behaviour, real estate development is experiencing evolving trends such as blending space and service management. In order to cater to the needs of nomadic rental customers, luxury serviced residences have emerged as an innovative segment that combines real estate with hospitality. It is a very unique offering curated to meet the needs of expats, business travellers, as well as C-Suite management clients, who are on the rise in business corridors,” says Niranjan Hiranandani, Chairman and Managing Director, Hiranandani Communities. “The well-organised concept of serviced residences at Hiranandani Parks is aligned with the idea of offering a home-like experience to guests when they are away on business,” he says.
The concept of luxury serviced apartments has been in existence since the past decade with apartments such as Somerset, Citadines, Taj Wellington Mews, etc. currently operating in Chennai. Given the renewed interest in the segment, there is more demand for such projects in Chennai, says Jerry Kingsley, Head, Strategic Consulting India, Jones Lang Lasalle. “In Chennai, the duration of stay of the target segment varies between 15 days and 6 months. Even though marketwide demand is around 30%, there are very few serviced apartments operated by large branded players that cater to this section, such as Somerset and Citadines OMR,” says Kingsley.
“Many of the premium serviced apartments offer a range of services. Besides coming in large sizes and high-end styles, they offer all the comforts, often much more, than what a five-star hotel offers. From personal cooks to driver-on-duty to other concierge services, they have it all,” says Sanjay Chugh, City Head – Chennai, ANAROCK Group.
What’s the hype about?
According to JLL, luxury serviced apartments stand out from traditional hotels by offering not only the usual hotel services, but also well-equipped kitchen facilities, spacious living areas with separate bedrooms, and even parking spaces. These apartments provide the comfort of a fully furnished home with the added convenience of regular housekeeping, avoiding the commitment of long-term leases. These apartments are also equipped with high-end amenities like widescreen LCD TVs and modern kitchen appliances such as microwave ovens, stovetops, and full-size refrigerators.
A real estate player says that many developers are keeping a low profile while talking about these luxury spaces inside their premises because other residents might not be comfortable with such concepts inside their gated communities. He explains that Tamil Nadu is home to people from Korea, Japan, China, Germany, the United Kingdom, the United States, and Australia, among others. And most of these countries have a huge business presence here, which creates the demand for luxury serviced apartments. The recently held Global Investors Meet 2024 also attracted huge investments from these countries, he says.
According to Jaideep Dang, Managing Director, Hotels & Hospitality Group, India, JLL, “The serviced apartment concept is quite prominent in cities such as Mumbai and Bengaluru, which witnessed significant long-stay demand. There are many branded operators already in these cities such as Taj Wellington Mews, Marriott Executive apartments, Marriott Suites, Grand Hyatt Residences, Hyatt Residences, Oakwood, Ascott, Citadines, Somerset, etc.”
He says that luxury serviced apartments have grown significantly over the last decade with a CAGR of 9%. “With the advent of prominent operators, the industry is poised to grow at a higher pace. There are approximately 20 branded luxury serviced apartments in the country and a few more are under development,” says Dang.