Why are service apartments a smart investment choice?

By Pradeep Mishra

There is a saying in English – ‘Big things come in small packages’. This also applies to investments made in the realty sector. The question is how? To answer this, I will give the example of studio and service apartment.

Generally, both these properties are built in small size i.e. with one bedroom and living, along with a small kitchen, balcony and bathroom facilities are also available in them. But these small-sized properties are in great demand in the market. Their prices also increase in proportion to other properties and because the size of such properties is small, their prices are lower than two and three bedroom flats, due to which it does not take long to sell them.

In such a situation, the demand for studio and service apartments always remains in the market. By the way, today I will not talk about studios but service apartments. Service apartment is a residential option that bridges the gap between hotels and traditional apartments. This is especially beneficial for those who want to stay in another city for a long time, away from their home or city and also want to enjoy the freedom and convenience of staying in their own home instead of staying in a hotel. Interestingly, in a service apartment, you can order food from outside or cook it yourself in the kitchen in the apartment. Similarly, you also get other facilities like laundry, cleaning etc. Let’s know what other features such properties have:

Furnished house, homely comfort

The special thing about service apartments is that they have complete furniture, electrical appliances and other essential facilities just like a hotel, which provides a homely atmosphere to the person living there. Along with the kitchen, the apartment also has a washing machine, fridge, microwave and appliances which make the lifestyle easy. There are no restrictions here like a hotel room. You can use it as a normal apartment, which gives a feeling of comfort.

No shortage of services

Service apartments are specially designed for those who are planning to live or work in one place for a few weeks or months. For example, suppose you work in a company that is sending you to another city for three to four months to complete a special project. During that period, you do not want to stay in a hotel for such a long time. Also, you want to stay in a place that feels like home and has excellent security along with housekeeping, laundry etc. like hotels. In such a situation, if your office does not have a guest house in that city, then a service apartment is an excellent option. Also, compared to hotels, service apartments are also economical.

These are also the benefits

The duration of stay in service apartments is flexible. You can book it for a few days, weeks, months or more. Compared to hotels, such apartments give more freedom and privacy and you can live life according to your routine. With the kitchen facility in the apartment, you can cook your own food. Due to more space in service apartments, you can also invite your friends and other family members, which is not normally possible in a hotel.

How to get investment options

Now the question is, how to invest in a service apartment with so many features? I had mentioned studio apartments along with service apartments in the beginning of this article. In the last two decades, private sector builders and developers have worked a lot on such projects. Along with metros, now the culture of service apartments has reached second tier cities as well. Most of the builders who build studio apartments, after their sale and completion of construction, enter into a contract with the owner to use the property as a service apartment. When the studio starts being used as a service apartment, a certain share is taken from the amount received in exchange for its booking and other facilities and the rest is transferred to the owner.

In such a case, the owner of the studio apartment gets more income in exchange for monthly rent, the builder or the person running it gets income in the form of commission while the person using it gets the pleasure of living in a home in an unknown city. It is no exaggeration to say that three people benefit from one service apartment.

Many such projects are still going on in various cities of Delhi-NCR. Also, if you want, you can also look for the possibility of investing in them on re-sale. Here I would also say that the way infrastructure is developing in small cities of the country, you should look for these investment options in second and third-tier cities because the investment made in the realty sector is of long-term. Also, you will get the property under construction cheaper and in the coming time, the return of your profit from this investment will be much higher.

(The author is a real estate expert and CMD, ORAM Developments)

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