Are Serviced Apartments a Good Investment?

When you think of investing in property, images of a traditional two-up-two-down terrace house may spring to mind.

These are pretty standard in the buy-to-let world, but what many investors are coming to realise is that there are a host of new, emerging opportunities.

Chief among these is the growing demand for serviced apartments. Younger generations are driving change in the world of short to medium-term accommodation.

The days of hotels with little more than twin beds and a kettle are dwindling. Now people want the professional service of a hotel and the home comforts of, well… a home.

It’s no wonder then that the popularity of serviced apartments, which provide the best of both worlds, has risen drastically in recent years.

So, we know that serviced apartments are great for users, but are they a good deal for investors? Well, if you’re pressed for time and want the short answer:

Yes.

If, on the other hand, you want to know why serviced apartments are a good investment, we’ve laid out the top reasons below.

Higher Rental Yields

Money talks in this world, which is why we’ve started by looking at the potential rental yields you could achieve with a serviced apartment.

According to research from JLL, long-term residential yields typically come out at 3-4%, compared to serviced apartments that regularly hit 6.5-9%.

This is because serviced apartments typically target a different type of tenant. Serviced apartments attract tourists or business people, who are happy to pay more to enjoy a spell of luxury.

For example, an apartment that may be worth £1000/pm could be used as a service apartment at £100 per night. Of course, the usual short stay nature of serviced apartments means you need a higher volume of tenants, but you could make more money in four weekends than you would over a month of traditional renting.

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