Quest leads global serviced apartment growth

Quest leads global serviced apartment growth
By admin

Quest Serviced Apartments has emerged as the fastest growing serviced apartment provider in the world, although the sector remained in short supply in the Australian market in 2012.

The Global Serviced Apartment Industry Report 2013/14 revealed that the Australian company's supply has risen by 28% in 2013 as compared with 2011.

It is followed by US-based Oakwood with 21.3% and Singaporean firm Frasers with 9.2%.

Other major players in the Australian market, after Quest, were revealed as Oaks Hotels & Resorts, the Mantra Group and Mirvac which is now part of Accor.

"Corporate customers are increasingly doing their business outside of major city centres, gravitating towards regional and suburban hubs where government infrastructure is supporting industry growth and development," it said.

"In turn, this is driving demand for extended stay accommodation."

However, the report also found that Australian serviced apartments remain in short supply as demand grows.

Global economic conditions present a major challenge for the sector with banks reluctant to fund new developments. In fact, the report found that, despite Australasian growth of 14.5% in the number of apartments since 2011, Australian serviced apartment supply actually declined in real terms against demand in 2012 after over a decade of consistent growth.

Operators highlighted obstacles as restrictive local planning schemes, excessive bureaucracy and lack of understanding around investment models with funding, land availability and competition from other property sectors also factors.

"The difficulties operators encounter raising the necessary capital for their projects reflects Australasia's financial markets' lack of understanding of serviced apartments,"  Quest executive chairman, Paul Constantinou, said.

But despite these challenges, the sector will grow to 30% of the total Australian accommodation market in the coming years – up from 25% at present, and up from 10% in 1999.

In addition, it is expected to outperform the hotel sector over the next three years, according to Atchison consultants. The company has forecast returns of between 13% and 15% for serviced apartments as compared with between 10% and 11% for hotels.

Meanwhile, Australasia was revealed as the most expensive region in which to stay in a serviced apartment with studio apartments starting from US$114 per night.

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