The latest trend in Property Investments - Serviced Apartments

Conceived in the USA back in the 1980s, the apart-(or condo) hotel concept of marrying second homes with investing in property has now skipped across the Atlantic and matured to appeal to a new breed of investors in the Arabian Gulf. In the traditional buy-to-let role it is the owner who has to put in the hard graft of attracting, vetting and possibly evicting tenants, not to mention collecting the rent and carrying out maintenance and repairs. Serviced apartments hotels are now threatening to kick traditional buy-to-let where it hurts as one of its key selling points is that it's managed and marketed on the investors' behalf and therefore hassle-free.

Sometimes called 'serviced apartments' in the UK, in the US casually named "aparthotels" are springing up all over business hubs and coastal resorts around the world at an impressive rate.

Previously in Europe the trend that never reached Dubai was timeshare ownership, a vehicle that was great for lifestyle and regular usage but wholly ineffective for investment as owners faced low liquidity of assets, high depreciation, restrictions on resale and no actual real estate ownership.

Today the serviced apartments via hotel model, participants own the freehold of a quality real estate asset with the added value of high rental returns. All of this is then underpinned by capital appreciation. Additionally serviced apartments via hotels tend to give higher levels of income than traditional holiday homes but the real deal-maker for the investor is the complete absence of headaches as a branded hotel management or company takes them all on.

For a serviced apartment building to work and be able to compete against traditional luxury hotel chains all the ingredients have to be right. Optimum locations, comprehensive facilities, a respected developer, strong brand awareness and of course good on-site management are just some of those ingredients. But in reality, serviced apartments are carving their own niche in the marketplace rather than taking on traditional hotel chains head-to-head, as their offering to the holidaying public is very different.

In Europe, the serviced apartment products are quite literally flying off the shelves because they are so attractive and easy to understand. The pricing is affordable for many, the rental returns attractive, capital appreciation, free usage, great locations and the investor owns the freehold. To top it all: they're tax efficient.

The clue is in the name, serviced apartments are more 'apartments' rather than 'rooms' and even the largest traditional hotel suite would be hard-pushed to compete. With generous square metre sizes relaxing, entertaining, dining, working and sleeping can be done in separate areas enabling the children to sleep whilst Dad watches TV and Mum enjoys a glass of wine with friends. An equipped kitchen also allows the flexibility of eating in thus saving money and releasing guests from strict hotel meal timetables - a lazy late breakfast in bed is now a possibility. Likewise a washing machine saves on laundry costs or taking home a case full of dirty linen.

A serviced apartment feels like home-from-home, but with greater potentials.

By Gergana Mineva