Serviced apartments are furnished houses with caretaker services where someone can rent for a minimum of 1 day and have an inhouse cook and househelp to assist in cooking and cleaning . They are especially marketable to family or group travelers who would like to be in close proximity to each other in a 1,2,3 bedroomed house.
Assuming kes 5,000 per night for a 2 bedroomed apartment, this works out to kes 75,000 per month at 50% occupancy. The same apartment fetches around kes 35,000 per month in rent.
Return on Investment.
Assuming construction cost of kes 3m, and a yearly income of kes 700,000 as serviced apartment or kes 350,000 as normal monthly rent plan, this works out as below
4.2 years as serviced apartment.
8.8 years as normal rentable house.
From the above, we can deduce that serviced apartment method works much better as a real estate investment compared to normal rental method. The Return on Investment for serviced apartment type building at 50% occupancy rate is close to Return on Investment for hotel type building , minus the management hustles that come about running the hotel.
Architect Francis Gichuhi Kamau.
gichuhi@a4architect.com
0721410684
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