The UK's serviced apartment industry is emerging from the financial crisis as a different beast. The ground has shifted and demand can now be found in areas where there perhaps was none before. Nowhere is this more evident than in London - Britain's serviced apartment hub.
Business travel numbers are beginning to increase, putting serviced apartments back on the radar of investors. However, a tough time has been had by all since the crash hit. Even at the beginning of 2013, the ramification of the financial crisis could be felt. Figures from the Association of Serviced Apartment Providers (ASAP) showed overall occupancy for January to March in London averaged just 77 per cent.
Nevertheless, green shoots are beginning to emerge and in Q1, despite low occupancy, weekly rental rates in London stood at GBP 1,102. This bodes well for the future. David Smith, chairman of the Association, said: "Many of our members experienced a slow start to the year, particularly in January but we are pleased to report that generally business has picked up in quarter two and are reasonably optimistic about prospects for the remainder of this year, both in London and the rest of the UK and Ireland."
With the sector on the verge of expansion, the time is ripe for investors to lock into growth markets across London. Here are three places where demand for serviced apartments will no doubt be fierce over the coming years.
The Royal Docks have found themselves at the centre of considerable regeneration in recent years. After being closed for shipping in 1981, Silverton and the local area went through a period of hardship from which it is only now emerging. The London Development Corporation is now in charge of regeneration and there is certainly lots to be excited about in the area.
Mayor Boris Johnson's recent decision to give the go-ahead to transform Silvertown Quays into a place of innovation is the latest development to generate buzz. The GBP 1.5 billion deal with the Silvertown Partnership is designed to attract global brands to the area, creating over 9,000 jobs and giving the economy a £6.5 billion boost.
The site will become the world's first cluster of purpose built centres for product innovation, with businesses showcasing their latest designs and interacting with customers. A guest quarter will also be constructed, containing space for an incubator, technology businesses, 1,500 new homes restaurants, cafes, galleries and leisure facilities.
At the beginning of the year Graham Craggs, managing director of Hotels and Hospitality, explained Southwark is one of the areas where supply growth has been the greatest. With 40 per cent of the area currently under regeneration this isn't surprising. In fact, developments are valued at around GBP 4 billion. Borough, Bankside and London Bridge could prove to be the most popular area. As one of the oldest parts of London, new developments benefit from its history and charm - not to mention its proximity to the heart of the city.
Silicon Roundabout is the creative district of London, home to media agencies and tech firms with a digital edge. The area encompasses Shoreditch, Hoxton and Old Street - meaning there's plenty to do during down-time for business travellers. Investment in the area is increasing and will be integral for securing its future.
Kam Star, the founder of Digital Shoreditch, told the Wall Street Journal: "The City (as the financial centre is known) has amazing knowledge of business. That richness that comes with nearly 1,000 years of being a business district is what start-ups desperately need."
What's more, Silicon Roundabout has government backing, helping tech start-ups grow from around 15 in 2008 to 1,363 in 2013. This growth was unprecedented in other sectors during the financial crisis. Unsurprisingly, property prices have skyrocketed in the area, so investors need to weigh up initial outlays against potential return on investment. However, as such an integral site of the UK digital age, Silicon Roundabout appears to be a safe bet for future growth. This is despite the emergence of digital hubs in cities like Manchester and Leeds, which offer lower rates for businesses.
- Tuesday 30 July 2013