Understanding the financial options for investing in serviced accommodations

Have you come across the term “serviced accommodations” but found yourself unsure of its meaning and whether it’s a suitable investment for you?

Serviced accommodations are one of the fastest-growing sectors of the property investment market and one that savvy landlords should be sure to watch.

With it becoming increasingly popular with tourists, business travellers and those looking for a more extended stay a hotel could provide serviced accommodation has some of the best potential for returns and revenue in Pakistan. Should you contemplate investing in serviced accommodations, and which serviced apartments are currently among the top choices for investment?

In this blog, we’ll answer the questions of what is serviced accommodation is and whether a serviced apartment a good investment, while breaking down the pros and cons of serviced apartments in Pakistan and helping you understand.

What is Serviced Accommodation?

Serviced accommodation refers to fully furnished, independent lodging that includes hotel-like amenities. This type of accommodation encompasses a diverse array of options. It can be budget accommodation or high-end accommodation. You have the flexibility to rent it for a day, a week, or even a month at a time. Serviced accommodations serve several different markets including tourists and leisure travelers, business people, contractors, and others.

From a property investment point of view, an important thing to know is that serviced accommodation is a type of short-term letting.

Types of Serviced Accommodation

Travelers have an option to choose from numerous forms of serviced accommodation. Within this segment, our focus will be on three key types of serviced accommodations: serviced apartments, apart-hotels, and corporate housing.

Serviced Apartments

Serviced apartments are an increasingly popular option of accommodation, offering a perfect mix of the comfort and privacy of home and the services and facilities traditionally associated with hotels. Such apartments are fully furnished and come with rooms, living rooms, kitchens, and bathrooms.

Serviced apartments are always located in the city center and are convenient concerning public transport, cafes, and attractions. However, they are popular with travelers of different professions. These include business persons, families, and individuals who seek to experience more personalized experience.

Read: Tips To Find The Profitable Real Estate Option In Pakistan

Aparthotels

Contemporary accommodation options like aparthotels have become popular among property developers seeking to maximize the demand for both home-like comforts and hotel-style services. Aparthotel is usually found in modern, purposely-built buildings or refurbished old buildings, located in prime locations, such as urban centers or business districts, major tourist areas, or popular destinations in Pakistan.

Corporate Housing

In the dynamic business environment and the era of global mobility, the need for business-oriented accommodation has become essential. In a nutshell, corporate housing caters to the requirements of professionals who may be staying for extended periods or relocating.

Serviced Accommodations: Profitability and Financial Options

Investing in serviced accommodations offers various financial options, each with its considerations:

Direct Purchase: Purchasing a serviced apartment or property on freehold term. This involves a substantial amount of upfront expenditures to gain absolute ownership and possibly earn more gains.

Fractional Ownership: A portion of a serviced accommodation property can be invested in. This cuts on initial expenditures but lowers your overall ownership share and earnings potential.

Real Estate Investment Trusts (REITs): Buying REITs that specialize in serviced accommodations. The investors pool their funds into these trusts which buy and manage the properties while paying out dividends but with comparatively less control.

Property Crowdfunding: Buying serviced accommodation through online platforms where multiple investors put in a small amount and collectively purchase a property. The platform and property determine the returns and risks.

Rental Programs: Buying a unit within a serviced accommodation building and partnering with a management company. Management company deals with rental arrangements and maintenance and receives a percentage of rental income.

Leaseback Arrangements: Buying a property and then returning a management company a fixed lease. This guarantees a smooth flow of income but restricts flexibility.

What should serviced accommodations include?

Serviced accommodation usually comprises furnished apartments or properties complete with necessary amenities and services to enhance a tenant’s comfort. Specific inclusions may differ based on the provider, but generally, most serviced accommodations should offer:

Furnishings: The apartment or property should be fitted out with all the required furniture and appliances like beds, sofas, tables, chairs, refrigerators, and kitchen utensils.

Housekeeping: The maintenance and cleaning services should be done regularly and may include cleaning, linen changes, and waste disposal.

Utilities: The rental price should include all the necessary utilities, including water, electricity, heating, and air conditioning.

Internet and communication: Internet connectivity and communication facilities such as phone lines should be provided.

Security: Security should be ensured in serviced accommodation to protect tenants and their belongings.

Access to amenities: In some instances, serviced accommodation may include a gym, swimming pool, and communal areas, depending on the provider.

Flexible terms: For this reason, serviced accommodation must provide flexible rental arrangements to suit the ever-changing requirements of tenants.

24/7 customer service: Tenants who opt for serviced accommodation will always enjoy the benefit of 24-hour customer service, which can help them with any problem or question that may arise.

Location: Serviced accommodation is usually situated in the city center, close to the transport, shops, food joints, and entertainment.

Also Read: Enhancing The Customer Experience In The Real Estate Call Center

In general, serviced accommodation presents a convenient and adaptable alternative to regular hotels and rental properties, providing a similar feeling of home when away from the house for a while or an extended period.

Conclusion

Serviced accommodations combine home comfort with hotel services, appealing to diverse travelers and offering flexibility in stay durations. Options like serviced apartments, apart-hotels, and corporate housing cater to varied preferences. Investment-wise, there are different avenues like direct purchase, fractional ownership, REITs, and crowdfunding, each offering distinct advantages. These spaces, with furnished amenities and prime locations, present an enticing alternative for extended stays, proving lucrative for investors and appealing to tenants seeking a cozy yet service-oriented experience.