Thought the serviced apartment market in London is comparatively small, when set against its global counterparts, growth in the market has been steady since 2008. (Dec 19, 2012)

In central London there are now 8,000 apartments and research from CBRE shows rent has grown by 25% over the last 12 months to an average of £1,214 per week. In fact, rent for three bedroom apartments in Kensinton and Chelsea has reached £2,959 per week.

While most serviced apartments tend to be in the West End, Canary Wharf and the City, new schemes are emerging as far out as Ilford. The growth in areas covered, as well as price, is hardly surprising as occupancy rates hit 90% – a higher than average figure, showing that demand in this area for serviced apartments remains strong.

Jennet Siebrits, Head of Residential Research at CBRE, comments:

“Preferences are changing for tenants, travellers and workers alike, as more look for a home from home rather than a luxury hotel. Factors such as more space, self-catering and lower rates than hotels are playing a large part in the boom of the serviced apartment market in London. It is fast becoming a preferred option for investors too, as rents and yields for well-located developments have performed well over 2012. Our research suggests Canary Wharf remains a strong investment opportunity, with yields in excess of seven per cent expected for 2013.

“There is a large shortfall in the overnight accommodation sector. As rents continue to increase, there is further economic preference by operators to offer units as serviced apartments over hotel accommodation, as operational costs are lower and returns are subsequently higher. This suggests a huge potential for growth and we expect to see an even larger demand for buildings, sites and operations from local and international operators.”

Sources: propertyreporter.co.uk and arla.co.uk and relocatemagazine.com