Luxury is not just about feeling good, but living good too. And this is certainly what Hong Kong’s exclusive market of luxury serviced apartments has in mind, with its state-of-the-art properties.
“It’s all about understanding what our guests really need and want -- making their new or temporary lives in Hong Kong as comfortable, appealing and effortless as possible,” said Girish Jhunjhnuwala, founder of serviced apartment provider Ovolo and managing director of Home2Home Lifestyles Management.
But in a property market where home prices have surged by 45% since the beginning of 2009, against a backdrop of record low mortgage rates, there is a question mark over whether luxury can still be affordable -- even for the city’s affluent. However, Jhunjhnuwala seems to think that luxury is not only achievable, but sustainable too.
Hong Kong’s serviced apartment sector has been, and continues to be, held up by the expatriate community and, with the worst of the financial crisis behind us, there is no shortage of what companies are willing to dish out in order to keep their talent in Hong Kong.
As FinanceAsia reported in June, Hong Kong still ranks as the eighth most expensive city in the world in terms of cost of living for those on expatriate packages.
The benefit of operating within the serviced apartment industry in Hong Kong is that the sector doesn’t experience the same volatility as the property market. Ovolo’s apartments are considered to be very affordable with monthly rents ranging from HK$11,500 to HK$60,000 (($1,480 to $7,700) depending on the size and location of the property.
Ovolo’s main competitors in Hong Kong are Shama, Swire Pacific and, until recently, Kush Living. In June, Ovolo completed the acquisition of two properties from Kush, thus making it one of the largest operators in Hong Kong with 174 apartments spread across five buildings.
Prior to Ovolo’s purchase of the Kush assets in Sheung Wan and Sai Ying Pun, these properties were struggling with about 50% occupancy. Post purchase and rebranding, occupancy has jumped to over 70% and Jhunjhnuwala has a goal to push occupancy in these former Kush properties above 90% by the end of this year.
Including the Kush properties, Ovolo's apartments have one of the highest occupancy rates among serviced apartments in Hong Kong at 95%.
Hong Kong is currently a seller’s market and with recent moves by the government to cool the property sector, including an increase of down-payment ratios that took effect on August 13, it can be expected that more affluent Hong Kongers will sit it out in luxury rentals until the market simmers down.
In this environment, business is good for Jhunjhnuwala. Riding on the wave of a nervous property market and strong demand for rental properties, the Ovolo franchise has flourished and is now looking to expand to Kowloon, Wong Chuk Hang and Ocean Park.
In addition, Jhunjhnuwala hopes to follow competitors like Shama and Swire Pacific and take Ovolo abroad -- to China, Singapore, India and Australia -- within the next two years.