Serviced apartments are becoming a trend in the real estate sector in Nairobi. Over the years Kenya’s capital city has recorded an upsurge of serviced apartments. As more Developers are keen on investing funds into the construction of serviced apartments. The key aim is to meet the growing demand of such dwellings, as serviced apartments offer hotel-like services in the form of allowing clients to rent apartment units.
The increase in popularity of serviced apartments is attributed to the rising preference for extended stay options in the city. This has led to an increased operation of multinationals as they are more interested in a serviced residence in Kenya. Global corporations prefer to host their employees who are largely millennials in such facilities. Most affluent Kenyans who are interested in serviced apartments are mostly located in Westlands. Currently, the largest number of serviced apartment users are largely business-based.
Nairobi is continuously attracting investment from multinational companies thus leading to continued growth and diversification of the serviced apartments sector. Serviced apartments in Nairobi over the past years have registered a 72 per cent occupancy rate as against 52 per cent occupancy rate for traditional hotels. This is mainly attributed to the freedom, comfort and flexibility offered by these apartments.
The trend has led to the development of high-end serviced apartments and five-star-hotel-based residences in regional hubs in Nairobi. According to Vaal Real Estate, serviced apartments have nearly doubled over the past five years with approximately 4,582 units in supply in 2018. Vaal Real Estate expects that the supply could surpass the 5,000 units marks. Westlands supplies 37 per cent of the residence because of its social amenities, business opportunities and entertainment. Kilimani comes in second at 28 per cent followed by the city centre supplying 9 per cent and Upper Hill supplying 6 per cent of Nairobi’s serviced apartment.
The report identifies Kilimani and Kileleshwa as regions that offer the highest returns which are mainly attributed to a more vibrant market and planning regulations that permit higher densities. A report by real estate investment firm Cytonn said demand from foreign investors increased the uptake of serviced apartments to 80 per cent occupancy rate. The growth is attributed to increased confidence from both retailers and consumers. One of the reasons for the high uptake in serviced apartments was also due to the space of rooms. The room size of serviced apartments is about 67 meters square inches, while the room size of traditional hotels is about 35 meters square inches. The supply is expected to continue growing in Westlands in mid-2022 by the upcoming ATC Building.
Serviced apartments are a more convenient alternative to long-term rentals. The future holds an expected growth of branded apartments and sectional ownership of serviced residences, thus resulting in a further increase in performance. Serviced Apartments offer more of a “home away from home” feel.