London, which is one of the top property markets in the world, is gradually opening up to the concept of short lets, which in the US and Asian markets, is also referred to as serviced apartments.
In other markets, short lets and serviced apartments have become established products of the real estate sector and London is heading in the same direction. Short lets are yet to gain popularity in the UK unlike in other global property markets for a combination of reasons. A recent study by leading property consultants indicates that short lets are set for a boom in London, as visitors prefer them over hotel accommodation.
A report prepared by the JLL UK notes that the serviced apartments market, including short lets, has created a new hospitality opportunity for investors, especially in London. As short lets are not mainstream products in the hospitality sector, the market is fragmented because of the variation in the service offerings. As a consequence, the short lets market has not fully evolved into a mature product in London or the rest of the UK. Nevertheless, property owners and property marketing companies are now reexamining short lets as a business, as more international travellers are exploring such accommodation over traditional offerings. The number of such inquiries with real estate agents is also on the upswing.
Though there is no specific study on short lets market in the UK, according to the JLL report, less than 10% of the total room inventory in London is held by the service apartment segment. This shows that the scope for including more properties under short lets accommodation is significant. There is already a gradual shift towards short lets with several property owners evaluating its business potential. The JLL study revealed that by 2019, London is expected to take the lead by adding 1,500 short let properties as property owners have signed up with leading serviced apartments’ operators and real estate agents, to explore this business. As international travellers are keen on staying in places such as “home away from home” during business or private trips, the demand for short lets is growing in London.
From the property owner’s perspective too, it makes business sense to open up their second homes for short lets instead of settling for long-term rentals. The rental revenue mobilisation from short lets is far higher than long-term rentals. This works in favour of international investors for whom the rental yield from short lets helps minimise the risks. Short lets are starting to be seen as a good investment opportunity by property owners because of its high profit margin, stable cash flow, high space efficiency, conversion flexibility and lower development cost.
Several property management companies are also exploring short lets as a dependable revenue stream. These short lets are marketed abroad for the benefit of international travellers, who want to stay away from the routine hustle and bustle of star category accommodation. Leading property companies have begun to advertise short lets and this could become a trendsetter for the London property market.
For advice on short lets which are great investment opportunities let us know. We’ll be glad to share our magnificent portfolio of properties for sale in London and discuss the business potential of homes which catch your eye. Alternately, if you own a short let and need assistance with lettings or property management our team of experts are on hand.