Do regions need service apartments?

Response to the request of modern generations

According to the classical formula, the availability of demand should affect the growth of supply. If we are talking about the potential of a new product for the market, we have to assess demand using a more complex formula, taking into account indirect factors, studying similar situations, alternatives and the situation in related markets.

Service apartments are the answer to the request of modern generations who do not seek (do not have the opportunity) to have large apartments or housing in high-class houses, but want to spend their leisure time in a variety of high-quality multifunctional environment.

Full-fledged apartment hotels, not pseudo-housing

Apart-hotels may be in demand among tourists who expect hotel service at a more comfortable price and with the possibility to cook in their own kitchen. Among students who appreciate a safe and comfortable living environment and a community of like-minded people. Among corporate clients who get the opportunity to accommodate employees for the period of a business trip at a lower cost (compared to hotels), but with the registration of all documents.

These are not apartments, which are sometimes called pseudo-housing, built on a plot of land with a purpose for non-residential development, but full-fledged apartment hotels, implemented taking into account hotel standards. They get star-rating, are managed by professional companies and offer services specific to hotels. There are no similar projects in Kazan, whereas in Moscow and St. Petersburg there are about 50 of them in total, and the number of rooms exceeds 20 thousand units.

There are several participants in the chain of creation and use of service apartments. The developer who develops the concept manages the construction and commercial premises at the operational stage. The management company is responsible for the management of service apartments at the operational stage. The owner (often investor) who buys an apartment to receive rental income (or accommodation). A tenant who uses all the functionality and services of the facility.

How service apartments will help Kazan

According to information from our partner, YE'S, the apartment can bring 6-8% per annum, and if you purchase an object at an early stage, the capitalisation by the time of commissioning can reach 15-20%. The apartment is commissioned with a fine finish, the search for tenants is carried out by the management company. It turns out that the investor does not have to do repairs, search for customers, or control the operation process. This is the great attractiveness of the apartment in comparison with apartments purchased for rent. If we compare it with investments in commercial real estate (offices, retail facilities), then a lower entry threshold can be designated as an advantage. 90% of the owners in apartment hotels are investors, more than 60% of whom have investment experience.

In Kazan, service apartments can help solve an important problem with the lack of places in hotels. Due to the active development of domestic tourism, the capital of Tatarstan can receive up to 5 million people a year. Already now, the tourist flow, calculated for 1 resident of Kazan, is more than 2 times higher than the same indicator of St. Petersburg. At the same time, the number of rooms designed for 1000 tourists is almost 2 times lower. Taking into account the existing number of rooms and apartments offered for rent, the pace of development of domestic tourism, we estimate the capacity of the Kazan market at about 5 thousand apartments.