BusinessWorld Insights, Aruga Apartments by Rockwell hold webinar on serviced apartments
Relatively few sectors of the global economy managed to remain untouched by the effects of the COVID-19 pandemic. The travel and hospitality industry, for instance, has been one of the most affected with the restrictions on mobility. Yet, one sector in the hospitality industry seemed to have been staying resilient: serviced apartments.
“The serviced apartment sector is a little different [from hotels] primarily due to its ability to answer a certain need,” Claro Cordero, Jr., director of Research, Consulting and Advisory Services at Cushman and Wakefield, said during a special session of BusinessWorld Insights in partnership with Aruga Apartments by Rockwell.
“Foreign travelers and nationals who are still working here need to be housed in professionally managed accommodation. And I think that’s where the strength of the serviced apartment sector lies. It becomes a safe haven for people who require this type of accommodation,” he added.
The special session explored the theme “Investment Prospects for Serviced Apartments” which looked at the performance of serviced apartments here in the Philippines and the promising investment opportunities offered by the sector.
Similar to Mr. Cordero’s insight, Savills data suggested that the core guest segment of serviced apartments continues to be dependent on longer length stays. It has been these longer length guests that provide the sector with higher average occupancy levels, something that has been witnessed on the entry to and during lockdown.
“The main source of demand for the sector is business travelers. There are segments and the sector of the economy that are still growing and are expected to grow after the pandemic,” Mr. Cordero said, adding that this makes serviced apartments a great alternative investment vehicle for investors.
“Real estate investment in the form of serviced apartments in times of crisis, like we’re having right now, tend to offer something unique to the market. Yield rates for residential developments for both mid- and high-end developments are fairly stable, suggesting that it is a good alternative instrument compared with other investment vehicles,” he said.
Cyndy Tan Jarabata, president and chief executive officer of Tajara Hospitality, said that serviced apartments are well-aligned with the current trend among consumers to prefer flexibility with their lifestyle choices, as serviced apartments can fit in well with the remote working lifestyle that has emerged with the pandemic.
“Due to the current conditions, serviced apartments are gaining popularity due to bigger spaces, more cost-effective and self-contained accommodations. We also see serviced apartments shifting to leisure demands, primarily because people wanted to cook in the kitchen or have a bigger living space,” she said.
Moreover, the flexibility of serviced apartments is not only attractive to guests, but to the investors themselves. Many serviced apartments provide owner perks like profit-sharing with the hotel operator, fixed minimum rental deals, hassle-free management of the property, and free stays throughout the year.
Mr. Cordero pointed out that as more of the Generation Z enter the workforce, many would want the kind of accommodations serviced apartments can provide, especially for business travelers in the future.
“For people who are choosing serviced apartments as investments, the number one consideration is location. As they say, in the end it is always ‘location, location, location’. You also have to look at the track record of the developer. Things that you should consider are the previous developments they have done, or how fast they turn over the units to owners,” Ms. Jarabata advised.
“As with any investment, depending on the asset class you choose, do your homework,” she said.
Aruga Apartments by Rockwell
Rockwell Land Sales Head Ysabel Rufino-de Leon presented about Aruga Apartments by Rockwell which provides over 100 units ranging from studios to two-bedroom accommodations, fully furnished in the Asian Contemporary style, infused with a sophisticated interior design and quality that is crafted to suit the needs of every kind of traveler.
Launched in 2014, Aruga Apartments, located in Rockwell Center, Makati City, has been operational for nearly seven years, proving resiliency even amid the pandemic. It has been a choice of residence for professionals in need of long-term stays in Makati.
In 2020, Aruga Apartments began offering its units for sale as a viable real estate investment with yields. The property was able to record 3.1% yield for unit owner investors, with the added slow and steady trajectory to pre-pandemic levels. For the first quarter this year, the yield grew to 4.9%, with an average earning of 955 per square meter for unit owners.
Aruga Apartments recently launched its new business model that combines health and safety with comfort and affordability. This allows for more attractive rates for guests, and in turn may boost yields for unit owners.