Since the 1990’s, when India liberalised its economy, several executives from India and abroad have travelled across the country for business purposes. Apart from corporate travellers, medical tourists also visit the country for various treatments. Family members often accompany these health tourists from the US, Europe, the Middle East and Africa, who visit the country for medical procedures lasting for a month or two. When faced with the prospect of spending a lot of time away from home, an expensive and uncomfortable lodging is the last thing one would need. Staying in a hotel for so long can be very inconvenient and expensive. A serviced residence offers an ideal alternative to an expensive hotel. Today, serviced residences are the preferred choice of stay for the domestic travellers as well as overseas expats. These residences are managed as per international standards; hence, travellers do not have to compromise on their set lifestyles. Another advantage of serviced residences is that they provide larger rooms as compared to hotels. They aslo provide various facilities to make one feel at home as per their own likes and preferences, along with a sense of belonging and privacy.
A serviced residence is a furnished apartment, which provides the basic amenities required by any home. It usually has a bedroom and a kitchen along with the living area. Serviced residences have a home-like atmosphere, where a person travelling with his/her family can stay. It is a ‘home away from home’ and is a great choice for individuals who travel frequently for their work. It ensures security, privacy and comfort. Usually, business travellers are exhausted of having to eat in restaurants; a selfcontained kitchen enables individuals to prepare meals of their choice. Most serviced residences are spacious, stylishly designed and decorated in attractive colours, equipped with everything as per the needs of the person using them. A person can choose between one, two or three-bedroom apartments depending upon his/her requirement. Along with providing home-like creature comforts, serviced residences are very cost effective as compared to hotels. The tariffs for such residences can vary from ‘2,000 up to ‘10,000 per day, depending upon the location and services provided by the residence.
View from the Top
The concept of serviced residences caught up in India in the early 2000’s. The years 2004–05 had the highest occupancy rates. Although initially confined to bigger cities such as Mumbai and Delhi, serviced residences are now very prominent in Bengaluru, Chennai, Ahmadabad, Pune and Hyderabad, which have surfaced as major markets for serviced residences. The NCR towns, including Noida, Ghaziabad and Gurgaon, are fast catching up, especially with these regions emerging as corporate and industrial hubs with the availability of large land parcels.
Many countries have different rules pertaining to the establishment and housing requirements. Singapore, for example, has a mandatory policy wherein an individual has to stay for a minimum of seven days for a product to be classified as a serviced residence. In India, there has been no uniform policy governing the building and operation of serviced residences. Laws concerning the length of stay are also nonexistent in India; the regulations pertaining to such residences vary by state, and sometimes even by cities within the same state. However, ever since the Ministry of Tourism has come out with the policy of rating serviced residences, different states are now considering freezing their respective policies for the development and operation of serviced residences. Different states have different rules for building serviced residences, For example, in Karnataka, Andhra Pradesh, Maharashtra and Goa, the State Government permits serviced residences only in a commercial or an institutional zone. A serviced residence needs a commercial licence, if constructed on a hotel-zoned region. In Uttar Pradesh, the number of corporate travellers has doubled in the last decade.
The state now has 20 percent occupancy of various serviced residences reserved for corporate travellers. With the Government recently introducing a real estate regulatory bill, the stage is set for regulating the serviced residences market as well.
Developing the Future
Serviced residences have also emerged as a good real estate offering from several small to mid-size developers. In developed countries such as the United States, the concept has already made its mark. Increased demand is prompting international and Indian property developers to cash in on the growing need for one-bedroom, one-kitchen service residences in various cities. Traditionally, hotel chains managed top serviced residences, which wanted to lower operating costs. Moreover, domestic players are independently trying to create a footprint in the market with many South India-based real estate companies, which are evaluating the potential of serviced residences aggressively. A number of companies across the country are coming up with the concept of running and managing such serviced residences, making it a lucrative investment opportunity to those who are willing to invest in such residences by becoming the owner of a suite and earning valuable operational returns. As these residences are located near corporate hubs, the occupancy remains high, ensuring good returns to the investors.
The concept of serviced residences is here to stay in India. Owing to the continual growth in corporate sector, the need for servicedresidences seems indispensible. The sector only needs the right policy framework for the concept to emerge as a strong real estate and hospitality product.
Neeraj Gulati is the MD of Assotech Realty.