The demand for serviced apartments in Nairobi city has not been well catered for based on the fact that there are a few operational establishments in/within close proximity to the CBD which include Longonot Place, Norfolk Towers, Chester House Apartments, Heri Heights Serviced Apartments, Andrews Apartments, and Taarifa Suites.
The returns for these are also very encouraging to any smart investor seeking to rake in big-time; with the average rates for the serviced units going for KES 120,000 ($1300) for the 1 bed apartments, 180,000 ($2000) for the 2 bed apartments and KES 250,000($2800) for the 3 bed apartment per month.
Moreover, the percentage of occupancy in these apartments at any given time is usually 90%, a clear indication that the demand for serviced apartments is usually high. With Nairobi growing as a business hub and conference tourism destination, the existing hotel space and bed capacity is not adequate to cater for the ever increasing demand for accommodation.
With expatriates coming into the country for business for months at a time, they seek the comforts of a home without having to go through the hassle of house hunting, furnishing and all other things that come with having a home.Unlike hotels which have check-ins and check outs on a daily basis, the apartments, usually hired on a monthly basis, have a lower turnover. The marketing needed is also minimal as once a client is satisfied, they will keep coming back and usually stay for months.
The most popular of the serviced apartments are usually one and two- bedroomed apartments for those who live alone. However the two- bedroomed apartments cater for people on long stays, especially to accommodate their families during the holiday seasons. Value addition for the serviced apartments will help establish repeat clients from the corporate, diplomatic and non- governmental organisations. Value addition is accomplished by including the following facilities:
- Health and fitness centre
- Swimming pool
- Room service
- Business centre, restaurant
- Reliable internet connection
- Adequate parking
The biggest challenge for the owners and management of serviced apartments is catering for the cost of utilities. The electricity needs, even during blackouts, and water needs chew into the profits. It is therefore recommended that the owner invests in generators and dig boreholes to counter these challenges.
By: Joyce Kibe – Investment Analyst at Mwanzoni Ltd