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‘Workcations’ to fuel serviced apartment sector, experts say

INVESTING in a serviced apartment can be profitable and “crisis-proof,” according to real estate professionals at a recent webinar organized by BusinessWorld.

“A serviced apartment is a fairly stable investment vehicle,” said Claro dG. Cordero, Jr., director and head of research at Cushman & Wakefield. “It provides a secure and stable income for operators, as contracts with long-stay corporate clients provide resilience.”

The strength of the serviced apartment sector, added Mr. Cordero, is that it provides a safer environment for its core end users — business travelers — who need to be housed in professionally managed accommodations.

The business process outsourcing industry, which is projected to grow after the pandemic, is seen as another source of demand. “The market is still very young,” Mr. Cordero added. “It will continue to professionalize.”   

Seen as an alternative to hotels, serviced apartments are fully furnished apartments that are available for short- or long-term stay and provide amenities such as housekeeping and laundry service. Examples of such properties include Shangri-la at The Fort, Discovery Primea, Raffles Makati, Aruga Apartments by Rockwell, and Grand Hyatt Manila.

These serviced apartments are evolving to meet emerging trends such as urbanization and workcations, said Tajara Leisure and Hospitality Group President Cyndy T. Jarabata. “If before we had staycations, now we have workcations,” she said. “We see a shift to serviced apartments, where in between Zoom breaks, people would prepare something in the kitchen.”

Among the most requested amenities are mini-kitchens and larger gym areas. “Some operators are putting up this gym product that’s already designed as part of the room. People want more privacy these days,” added Ms. Jarabata, referring to the fitness solutions offered by TechnoGym.

Other trends that will drive serviced apartment sector include the prevalence of the work-from-home scheme, with people becoming less attached to their workplaces and wanting more flexibility; as well as urbanization, with cities increasingly growing at the expense of the countryside. 

Potential buyers should seek the services of a professional operator, advised Cushman & Wakefield’s Mr. Cordero. “The professional operator will do the marketing and upkeep of the property for you. It also eliminates the hassle of doing due diligence with tenants, especially if you don’t know who your tenants are. You don’t want your unit bastardized.”

Ms. Jarabata added that investors should do their homework by research location, checking the track records of developers and operators, and studying the lease term agreements. “Bad developers and bad operators: those are the risks,” she said. “It’s quite an investment — we’re talking millions. Due diligence is needed.” — Patricia B. Mirasol

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