Europe: The latest research from Savills examines the performance, pipeline, transactions and more of serviced apartments across Europe.
Year-on-year KPI growth for UK serviced apartments started to slow throughout 2022 and 2023, with most months in Q4 2023 and Q1 2024 seeing RevPAR growth drift into negative territory, largely driven by London.
Despite this, average annual RevPAR rates between 2021 and 2023 for the UK extended stay sector were 27.5 per cent higher than the hotel average. Enhanced RevPAR rates are supported by the fact that ADRs in the sector tend to be higher (around £140) due to larger unit sizes compared to the average hotel (around £110).
Paris and London are the lead markets in Europe in terms of current supply, with more than 11,000 units each. By 2028, London is expected to overtake Paris as the largest serviced apartment market in Europe, with a projected 21 per cent increase in supply.
Other development hotspots include Dublin, with close to 700 units in the pipeline, reflecting a 34 per cent increase in supply, albeit off a low base. Likewise, Lisbon will see a doubling in supply, also off a low base, with over 500 units in the pipeline.
Across Europe’s largest city markets, extended stay accommodation accounts for an average of 6.1 per cent of total accommodation supply, meaning there’s potential for further expansion. Lisbon and Stockholm stand out as being the most relatively undersupplied, where extended stay stock nights (stock/units multiplied by 365 nights) account for only 1.6 per cent and 2.8 per cent of total nights where trips are longer than four days.
Staycity ranks as one of the largest operators of extended stay in Europe with more than 2,700 new units already committed. Looking at the number of keys in development pipelines, limehome, Adagio, Marriott and NUMA form the top five companies. In terms of locations, Staycity, Adagio, edyn, Marriott and Stayery will have the largest geographical presence based on committed pipelines.
The sector recorded nearly €700 million in transactions in 2023, representing 4.7 per cent of total hospitality volumes. In Savills’ latest European Living Investor Sentiment Survey, 30 per cent of respondents cited that they were targeting European extended stay/serviced apartments over the next three years, ranking it sixth out of 15 living sectors covered.
Savills expects to see the increasing emergence of blurred concepts that can pivot into extended stay, co-living and student demand.
Click here to read the full European Serviced Apartments 2024 report by Savills.
