While the recent upswing might have hinted at buoyancy returning in hospitality, real estate developers believe the initial demand for service apartments may come from upcoming industrial locations. According to industry experts, of these industrial locations, it is the multi-product special economic zones (SEZs) that may boost such demand.
"Service apartments will still take some time to find takers. However, the initial demand for them will come from multi-product SEZs. Real estate developers will have to look at such SEZs if they intend to do some good business in service apartments," says YK Tyagi, executive director at DLF.
Tyagi's views are echoed by RJ Shah, chief executive officer of Dahej SEZ, a multi-product SEZ in itself. According to Shah, with several foreign as well as domestic units looking to set up houses at these SEZs, the need for places for longer stays will arise in due time. "As against hotels, service apartments tend to be less costlier if someone intends to stay longer. The units that will come up in our SEZ, or any other multi-product SEZ for that matter, will require places that are compatible for longer stays with all kinds of amenities, and this will provide good opportunity for real estate developers for setting up service apartments," says Shah.
However Shah, whose Dahej SEZ is itself planning to come up with service apartments at its premises through its hospitality projects. Dahej Hospitality Pvt Ltd and Sapathagiri Hospitality Pvt Ltd, adds that there is lack of real estate developers working in this area. "More often than not, real estate developers tend to look at residential projects and not service apartments which can be rented out for longer periods," he says.
Moreover, even in multi-product SEZs, industry sources say that the demand for service apartments would come from units with lesser gestation periods like assembling and IT. "It is usually units or sectors like IT or assembling, which have lesser gestation period, that result in quick demand for service apartments. Even in the multi-product SEZs, demand for service apartments may not arise from all kinds of units," says a company source at Sterling SEZ, which is being developed near Vadodara.
