With an improved second quarter and an upswing in the economy, real estate developers in Gujarat are buoyant again about service apartments. From increased visits by non-resident Indians (NRIs) and non-resident Gujaratis (NRGs) to business travels, real estate developers and hospitality players are attributing various reasons for renewed interests in service apartment projects.
While Elecon Engineering, which recently launched a five star resort near Vallabh Vidyanagar, has announced its plans to set up around 15 service apartments in the second phase of the hospitality project, others are likely to follow suit soon.
"The main reason for demand of service apartments is the frequent visits by NRIs and NRGs. Since they come from abroad and tend to face lot of hassles in finding rented apartments, they look for service apartments. Keeping this rising demand in mind, we plan to construct a set of 15 service apartments within one and half years at an investment of Rs 5-7 crore," said Prayasvin Patel, chairman and managing director, Elecon Engineering Company Ltd.
Real estate analysts do agree that the option of service apartment tends to better than hotels as far as corporates are concerned. "The demand for service apartments in tier-II cities is definitely on the rise. Some of the factors that are contributing to it is the influx of NRIs, medical tourism and more corporate travel. In Ahmedabad itself, at least 7-8 developers are set to begin work on service apartment projects," said Hitesh Shah, chief executive officer - residential properties, Space Management, a real estate consulting firm.
According to Jaxay Shah, director of Ahmedabad-based Savvy Infrastructure, the rise in demand for service apartments is also due to a buoyant economy. "Longer business trips are likely to increase by the end of the financial year 2009-10. With corporates and employees alike preferring for frequent and longer stays, service apartments will see more takers. There are 2-3 projects expected to pick up in Gujarat soon," said Shah.
In its upcoming service apartments, Elecon is likely to offer three variants including weekly stay scheme, monthly stay scheme and three months scheme. However, industry estimates reveal that the investment in service apartment costs over Rs 20 lakh per room which tends to be higher than that for hotels at times. "Since the per square feet area is larger in service apartments, apart from more bathrooms and kitchens, apartments would cost more than hotels. However, the exact pricing would only be known once projects begin to commission," said Patel.
As per Hitesh Shah, cost of developing a 500 sq ft service apartment in tier-II cities comes to around Rs 4,000-5,000 per sq ft. "However, this may vary depending on land prices," he added.
