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Saturday, July 18, 2009

Occupancy rates still good for serviced residences

When it comes to the property sector, the old adage “location, location, location” will always be relevant, more so during an economic downturn and it’s no different for the serviced residence sub-sector.

Managers and operators of serviced apartments within “renowned” areas in Kuala Lumpur, such as main board-listed The Nomad Group’s The Nomad Residences Bangsar, are still registering good occupancy rates.

But prime location and stable occupancy rates aside, The Nomad Group chief executive officer Hew Thin Chay says it is always trying to improve its services for its residents.

“We are always continuously finding ways to improve the amenities and services to our guests, such as making the residences technologically enhanced with broadband,” he tells StarBizweek.

The serviced apartment had an 87% average occupancy for first quarter of 2009, Hew says adding that there was an increase in occupancy compared to the preceding quarter.

“We offer short-term stay (less than 12 months) and the rate is inclusive of rental, utilities, security and cleaning. This makes it convenient for guests.”

Hew says yields have been small but steady.

The fully furnished apartments come with 24-hour security, CCTV, concierge service, free WiFi, housekeeping services, swimming pool, gymnasium, covered carparks and shuttle services to surrounding areas in Bangsar are also provided.

The serviced apartment was officially opened in July last year.

Hew says the serviced residences were targeted mainly at business executives and their families, but were also popular with locals.

The apartment offers a choice of 10 one-bedroom units (RM7,500 per month) and 48 three-bedroom units (RM11,500 per month).

In light of the downturn, Hew says there were no plans to reduces its rates. What’s more, residents of The Nomad Residences Bangsar are also privileged to “residential” rates rather than commercial rates.

“Our rates are already competitive and it includes utilities, all in one bill,” he says.

The economic downturn, meanwhile, has had a bit of an impact for relative newcomer Virgin Properties Sdn Bhd, which has been operating Lanai Gurney Corporate Suites off Jalan Ampang since April last year.

Chief operating officer Melissa Ram forecasts tough times ahead and highlights the importance of adding new services.

“We have many plans lined up for further improvements to the building, such as WiFi services to meet the current demands of our residents.

She adds that the average occupancy rate for the first six months of 2009 was within the region of 50%.

“As the economy suffers, people tend to cut down their travelling, especially for holidays and business trips. Trips also tend to be shorter, perhaps just for one day.

However, Melissa is optimistic about the future.

“The months of July and August look promising, mainly due to the summer holidays in some countries that brings holidaymakers from those countries to Malaysia.”

Located just two kilometres away from the KLCC area, Lanai Gurney targets mostly expats, corporate clients, government agencies, business travellers, filming groups and students.

Its rates range from RM1,000 to RM3,800, depending on the size and the view that the unit commands as well as the duration of the stay. Based on commercial standards, Melissa says the rates of the Lanai Gurney were already competitive and the company has no plans to reduce rates.

Ken Holdings Bhd executive director Sam Tan meanwhile says he is excited about the response for its Ken Bangsar high-end serviced apartments, which is expected to be launched later in the year. So far, about 50% of the units have been sold, averaging between RM700 and RM1,000 per sq ft.

“Nearly half of the buyers were foreigners. Our other purchasers are those within the upper market,” he says.

Tan says sales have been frozen for the time being and would resume after the launch, adding that he was optimistic that the economy would “improve” by then.

According to a city-based realtor, occupancy rates for high rise residential properties in the KLCC area and established suburbs like Petaling Jaya, Damansara Heights and the surrounding areas have been good so far.

She says the reason the suburb markets were steady was because most of the residents purchased the property for their own use.

“Many of the purchases were made years ago, meaning that they would have reached the tail end of their loan repayments to the banks.”

By The Star (by Eugene Mahalingam)

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