looking beyond covid-19: serviced apartments – central changes for ‘the sector in the middle’ in china
sep 17, 2020
shanghai, september 17, 2020 ——according to cushman & wakefield’s recent report -
looking beyond covid-19: serviced apartments – central changes for ‘the sector in the middle’ in china, the serviced apartment sector has always occupied that business domain in the middle, between the hotel sector and the rental housing sector. just as with the hotel sector in the region, during the height of the epidemic period, the serviced apartment customer base in china saw a considerable reduction in size during the early months of 2020. moreover, given the early lockdown restrictions and, thereafter, fewer people travelling for business around the country, pressure on serviced apartment occupancy has been relentless throughout the first half of 2020. however, given the longer-term stay nature of the serviced apartment business model, when compared to the hotel sector, the occupancy pressure was cushioned, with average occupancy at much higher levels than the single digit average occupancy experienced by many hotels in china during the early part of the year. when taking the premium serviced apartment market in shanghai as an example, we can see that overall market average occupancy currently stands at around 80%, a low not seen for the sector since the end of 2009.
given the lower-than-usual level of occupancy, serviced apartment rentals around the country have also come under pressure, with a general year-on-year (y-o-y) drop seen in most city markets around china during the early part of the year. having said this, some city markets, including shanghai, hangzhou and ningbo, did experience relative rental rate stabilisation during the same time period, with the premium serviced apartment sector in shanghai, in particular, reaching an average of rmb 251 per sq m per month at the end of q2 2020.
looking forward into the rest of this year, supply in china is likely to be subdued as developers/investors delay new completions to avoid the soft market.
the current premium serviced apartment market is certainly less dependent on overseas guests than in the past, but overseas guests are still an important part of the premium market and as such, until the international travel ban is lifted, leasing will continue to remain under some pressure.
moving forward, given the impact of the outbreak, we do expect some central changes to be carried out and implemented within the serviced apartment sector in china and they are:
immediate changes – a greater emphasis on health and safety.
longer term changes – the implementation of smart technology, and project renovation/repositioning.
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “once there is a full resumption in business travel, then serviced apartment sector business activity in china will begin to reach normality. only when this normalisation in commercial activity is achieved will serviced apartment owners and operators in the country be in a position to fully appreciate the much longer-term industry opportunities to be had from continuing to actively participate in the serviced apartment sector in china. when the wider future outlook is fully realised, such as expected future growth in business travel, we expect many more serviced apartment owners and operators to take a longer-term view by investing in their projects and ensuring central changes are made for ‘the sector in the middle’ in china.”
please to download the report
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, 22 offices are servicing the local market. the company won four of the top awards in the euromoney survey 2017, 2018 and 2020 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $ 8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
