Serviced apartments becoming popular in the NCR
In a recently-launched project in the National Capital Region (NCR), the developer promised amenities, such as power back-up, fully air-conditioned rooms, modular kitchens, pantry and laundry facilities, as well as a professional concierge services R
In a recently-launched project in the National Capital Region (NCR), the developer promised amenities, such as power back-up, fully air-conditioned rooms, modular kitchens, pantry and laundry facilities, as well as a professional concierge services within the premise. Over the last few years, there has been a notable increase in the demand and supply of such ‘serviced apartments’ in the region. Moreover, a strong secondary market has also emerged, for serviced and furnished apartments.
This segment has emerged, owing to the demand for furnished rooms from business travellers and the young workforce coming into the metro. Consequently, development firms are focusing on increasing their sales in this segment. A channel partner of Gaur Suites from Finlace Consulting, who wished to remain anonymous, explains “The concept of serviced apartments is becoming popular in the metropolitan and big cities, such as the NCR. Most of the projects that have been launched so far, have registered healthy offtake.” Upcoming and under-construction projects are expected to ready for possession after 2016.Merits and demerits of serviced apartments
For owners, these apartments serve as profitable assets that can be leased out. The rental yield is decent, as compared to the rent for an average hotel room. Moreover, the owner can rent it out to different types of tenants, including business travellers, travellers on vacation, or to young individuals working in the neighbouring regions.
In India, the general rental yield from a residential property, ranges between 3% and 5%. In comparison to this, the capital appreciation on properties in the NCR is over 10%-12%, annually. The current rent in an upmarket locality of the NCR, ranges from Rs 8,000 to as high as Rs one lakh per month, with the higher prices being commanded by the bigger apartments.
See also: Do park-facing apartments deserve a higher price?
However, the initial investment rates are higher for serviced apartments. For example, the sale price of a serviced apartment along the Noida-Greater Noida Expressway, is around Rs 6,000 to Rs 7,000 per sq ft. On the other hand, a regular, bare-shell apartment on the same stretch will cost Rs 4,000 to Rs 5,000 per sq ft. Another grey area in this segment, pertains to maintenance and services. While a few developers have tied up with professional firms or hotels, for services, others are simply providing the amenities in their projects and leaving it to the buyers to take care of all the maintenance.Strong secondary market
Compared to the primary market, the secondary market in the NCR is robust. Old areas of Delhi, where one can see redevelopment projects, now have such serviced apartments. Areas of south Delhi, west Delhi, Dwarka and the new sectors in Noida and Gurgaon too, offer such apartments. The costs of these apartments vary, depending on the location. A 1-BHK, 600-700 sq ft apartment in the upmarket south Delhi, can cost as high as Rs 60 lakh to Rs one crore.Who should invest in serviced apartments?
Buyers with extra cash can invest in this rentable asset in established areas. Nevertheless, risks exist. “Like any other residential segment, delays in construction are also being witnessed in the serviced apartments segment,” cautions Surabhi Arora, associate director – research, Colliers International. The other class of buyers are those, who may have to set up their base in the metro, for business reasons. First-time home buyers, should avoid investing in serviced apartments and instead, focus on regular apartments in the same area, advises Arora.Project Region Size/area on offer (in sq ft) Configuration Basic selling price (in Rs per sq ft) Tentative completion date Unnati Fortune Vesta Suites Sector 144, Noida-Greater Noida Expressway 500 1-BHK 6,000 End of 2019 Nimi Symbolic Homes Sector 80, Noida 800-900 2-BHK 3,150 Mid-2017 Gaur Suites Noida Extension Approximately 500 1-BHK 6,000 End of 2018 Wave City Centre Livork Sector 32, Noida 672 1-BHK 8,900 Mid-2016 Wave Amore Sector 32, Noida 1,548 2-BHK 7,400 End of 2016 Assotech Business Cresterra Sector 135, Noida Expressway 600 1-BHK 7,100 Mid-2017 Nimbus Golden Palms Sector 168, Noida 506 1-BHK 6,500 End of 2016 Imperia 37th Avenue Sector 37C, Gurgaon 900 2-BHK 5,500 End of 2018 Imperia Elvedor Sector 37C, Gurgaon 625 1-BHK 5,400 End of 2017 Magnum City Centre Sector 63-A, Golf Course Extension Road, Gurgaon 757 1-BHK 9,750 End of 2018 Elan Mercado Sector 80, Gurgaon 675 1-BHK 8,500 Mid-2019 Gambhir Housing Precision Soho Tower Sector 67, Gurgaon 525 1-BHK 5,500 End of 2016 Central Park 3, The Room Sohna, Gurgaon 1188 2-BHK 6,300 Feb 2016 M3M Urbana One-Key Resi-ments Sector 67, Gurgaon 550 1-BHK 9,700 July 2016 Burman The Spectrum Sector 82A, Gurgaon 663 1-BHK 9,900 End 2018
Table source: Market research, Content Consultants