The Hindu Business Line : Realty players jump on service apartment bandwagon

Segment chart
Industry size estimated at about 20% of the total hotel industry biz.
Ansal API building 5 types of units in Greater Noida, Sushant Nagar City townships.
Parsvnath building apartments at Bhiwadi in Rajasthan, Chandigarh.

S. Shanker

Mumbai, Oct. 13With a stupendous rise in business and tourist travel, the serviced apartment segment appears to be carving out a niche for itself within the hospitality sector.

Sensing the opportunity, realty majors such as Ansal API and Parsvnath Developers, besides a host of new aspirants, are in the fray to meet the growing demand.

New players such as Mennen Aviation & Hospitality Ltd, which has a land bank of about 100 acres spread across Maharashtra, Goa and Karnataka, plans to set up 15 service apartments by 2010.

Service apartments are fully furnished and self-catering units open to business travellers, tourists or corporates, offering the conveniences of a home equipped with house-keeping, room-service, 24-hour receptionists, security and travel desk.

Often, such apartments are required for two to 6 months at a time and in general cost less than a four- or five-star hotel in the same region.

Standards up

Parsvnath Developers Ltd is building fully-furnished service apartments at Bhiwadi in Rajasthan, and Chandigarh. “With high-profile executives on the move, and who are increasingly showing their inclination to have high standards of living with a personal touch, there is a growing demand for worthy temporary accommodation. Industries involving high level of travel like BPO and IT show up a huge demand,” says Dr B.P. Dhaka of Parsvnath Developers.

Mr Naresh Malkani, CEO, Indiaproperties.com, estimates the size of the serviced apartment industry to be about 20 per cent of the total hotel industry business, where demand is for 1,30,000 rooms and availability 1,03,000 as of 2007.

Service apartments function as mini-sized hotels and with rising costs in the hospitality industry, present a convenient and cost-effective option. “There is a huge market for the serviced units and they are going to give hotels a run for their money,” he says.

Potential

Mr Kunal Banerji, President, Marketing and Corporate Communications, Ansal API, says “There is an excellent potential in India and abroad as there is a lot of movement in corporate circles, businessmen and the like.” Ansal is building five types of service apartments in Greater Noida and Sushant Nagar City townships.

Mr Shashank Paranjape, Managing Director, Paranjape Schemes, says Pune is turning to be a IT hub and thus his main prospects are the IT professionals who cannot stay in hotels which are very expensive and yet demand the best service. The new trend in Pune is ‘walk-to-work’ with professionals predominantly in favour of it.

Mumbai high

A Cushman and Wakefield report in April said the hospitality-cum-residential options in Mumbai are mostly provided by luxury hotel chains such as Taj Wellingdon Mews at Colaba, Grand Hyatt Residences at Kalina and Marriott Lakeside Chalet at Powai.

With top-end facilities, they were possibly more comfortable and economical compared to staying in a five-star hotel room for a long period, but were 300-400 per cent more expensive than similar-sized residential apartments in prime locations.

Rents for a two-bedroom apartment (1,100-1,500 sq ft) range between Rs 4,50,000 to Rs 7,00,000 per month, while a semi-furnished regular two-bedroom apartment varies between Rs 1,00,000 to Rs 2,50,000 a month, in a similar location. However, despite their high cost, they were rapidly gaining popularity.

Bangalore, it said, had about 15 such professionally-managed apartments in high interest residential localities and most are not class-comparables to 5-star hotels. Occupancy levels are said to be close to 90 per cent.

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