Upscale homes rents up
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Domestic firms are still unable to break into the serviced apartment market, even as rents continue to rise, bucking the market downturn.
"Our company has a very optimistic view of Beijing and we are trying to open at least two more properties in Beijing within the next two years," said Huang Jinshuo, general manager of Lanson Place Central Park Residences in Beijing's CBD Sunday. Lanson Place Hospitality Management, based in Hong Kong, manages premier serviced residences in Asia.
"Besides the niche market that Lanson Place has right now, we are also looking at high- to mid-end serviced residences to enlarge our client base," Huang said.
Lanson opened its first residence June 1, 2008 in Beijing. "That was not a good time because the vacancy rate went sky high after the Olympic Games," Huang said. But the situation improved at the end of last year, and has been only getting better since.
Other foreign-run serviced apartment firms, like Captialand and Oakwood, have already entered the Beijing market
The economic recovery has brought on a return of high pay and benefits for managers in the Central Business District leading to a rise in rents.
Although the Chinese State Council rolled out a series of policies to curb the over-heated property market, Huang said they have had little effect on their operations in the last two months. "Our rents have risen 10 percent to 15 percent in the last three months. At present, the limited supply of properties is good for the rental market," Huang added.
Despite the chance to make big profits, nearly no domestic developers are operating or plan to open serviced residences.
The domestic firms develop properties without holding onto them, simply speeding up the financing, investing and sale to make huge profits, said Qin Xiaomei, with Jones Lang LaSalle.
"Domestic companies really lack experience in operating serviced residences," Qin said.
It's obvious that serviced apartments have to be run differently. Lanson Place hosts parties for the residents and does its best to attract high-flyers from Fortune 500 firms to live in their properties.
"That's another reason that the senior managers want to live here," Lanson Place's Huang said. "Everyone wants to be the neighbor of a big shot."
