INVESTING IN SERVICED APARTMENTS IS A GOOD OPTION
With the steady growth of business in urban suburbs, travel executives from India and abroad frequently travel to business hubs and spend weeks and months working from different locations. Staying at hotels for such long periods is costly and this is where serviced apartments offer an alternative.
Serviced apartments are a convenient and cost-effective fully furnished accommodation option for leisure and business travellers looking for extended-stay accommodation that resembles home conditions. With a small kitchen and rooms generally more spacious than in a hotel, they also come with all modern communication facilities such as telephone, wi-fi connection besides housekeeping staff and a concierge service.
For house owners, it throws up a new opportunity and an alternative way of putting their premises on rent. The concept of serviced apartments in India started in 2003-04. Initially in Mumbai, Bangalore and Delhi, serviced apartments have now extended their presence to smaller cities, driven by commercial demand. A wide range of accommodation options are available within complexes, from studio apartments to one-bedroom and two-bedroom units. The main client base is of course the corporate sector. The demand is primarily driven by executives of multinational companies (MNCs) and expatriates who come to India on deputation for periods ranging from weeks to months.
Although mainstream hotel companies are the major players in this business, developers are increasingly offering these apartments to individual buyers also. Several small to mid-size builders are marketing serviced apartments as an investment opportunity with returns in the range of 9-14% per annum. At present, investment in residential properties is more for capital appreciation than rental income. Annual yield via rental income from a residential property is generally 3-4% a year while capital appreciation is 10-15%.
The main benefits of investing in a serviced apartment are:
A fixed income
No vacancies between tenants
No long-term lease
No broker fees for renting
No repair or maintenance obligation
Serviced apartments are also becoming more popular option for generating higher rental income as it is considered a value-added service
According to Mr. Anil Mithas, CMD of Unnati Fortune Group that has several such projects coming up in NCR, “Like any property investment, location is important in this case too. Proximity to business centers and good connectivity will lead to higher rental income and capital appreciation.”
If investing in real estate is your ball game, it may be a good idea to diversify your exposure to serviced apartments for a higher annuity income than what residential apartments can give. But don’t forget to undertake a due diligence of the project before signing your cheque.
Source-http://unnatifortune.com/
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