Get Return On Investment by Leasing Second Home as Service Apartment or Corporate Housing, an Intelligent Way


Having an apartment other than you are living in and wondering what to do or how to ensure regular maintenance as well as returns from the investment?
The answer to all these are agencies, which act as intermediaries between landlords and corporate. Welcome to the world of Enkay, Baani, JDS Utilities, Ahuja Residency, etc. These are a set of companies which understood the need for corporate housing in the wake of the IT boom, especially the extended stay in another city for business executives.
Typically, these agencies consolidate apartments in residential complexes and operate, maintain and manage them and lease them out to corporates. In a nutshell, they ‘service’ these apartments, provide corporate housing to multinationals, give a regular monthly return to the landlord and for the services they offer they charge a fee from other stakeholders. Take the case of JDS Utilities, a company which offers fully-furnished and readyto-move-in serviced apartment in all key IT cities like Gurgaon, Pune and Bangalore.
Monica Khanna of JDS Utilities says that they have over 40 such units in Gurgaon. “We started out as a transport provider for MNCs and then moved into this sector. Our area of operation is Gurgaon, since it is the office destination of north India. Our apartments provide all the amenities of a hotel room along with the comfort and privacy of a home to the corporates and their families.”
One of the oldest players is Enkay. A spokesperson from Enkay says that each of their serviced apartments are in community buildings, which are very close to shopping areas and all facilities like pharmacy, banks, clinics, eateries, etc, are easily accessible.
Generally speaking, these serviced apartments are fully furnished small apartments which are rented out on a short-term or long-term basis. They are also equipped with facilities like a hotel; a kitchen is provided with necessary amenities like a fridge, a hot plate, a microwave, etc. There is complete bedding with bedspread, pillows, and towels, telephone, TV, 100% power backup in each apartment, internet connection, 24×7 security, etc.
For the landlord, it is important to furnish the apartment to derive greatest returns from it. This means initial investment in making the apartment self-sufficient. The benefit is in maintenance of their property. There is not a significant difference between leasing out to any company vis a vis an individual. But the company definitely maintains the apartment better, as they take care of the apartment as opposed to a tenant, who may be good or bad at housekeeping.
A lot of NRIs are interested in proper maintenance of their property. V Nagarajan, who conducts property shows worldwide, says: “The availability of property management services has not yet percolated down to NRIs like LJ Hooker, Red Sky, Remax, as NRIs are very particular about seeking such services to manage their properties in India.”
NRI homes are a captive mass for such agencies as the latter ensure maintenance and upkeep of NRI’s homes, with a regular monthly return.
Currently, there is a huge demand supply mismatch in serviced apartments. Ninety-five per cent of the clients for these agencies are corporates, which require extended stay apartments, and there are not enough in the market. With a growing number of IT companies, and MNCs setting up base in emerging corridors in cities, developers are quick to tap this segment and there is construction happening across the NCR region.
Examples include Assotech Realty Pvt Ltd’s Cabana Suites, at Indirapuram, and Sandal Suites under construction, on Noida Expressway, as well as Vigneshwara’s serviced apartments at Manesar.
For the corporates, serviced apartments are a way to effective cost control. Gurgaon-based real estate consultant Rajat Mahajan says: “There are many people and corporates operating the serviced apartments – these are ‘no frill, budget accommodations’ and suit corporates, which have a large employee base and operate from multiple locations and require their employees to stay for longer periods at these multiple locations.
This varies from a pool of 2-3 apartments, which are operated by individuals and leased to corporates for different terms.
An apartment which normally fetches a rental of nearly Rs 50,000 per month would fetch about Rs 1.50-2 lakh per month after furnishing it and with basic service of kitchen, etc.
This, however, requires complete engagement of the landlord, unlike a typical landlord-tenant relationship. This results in great savings to the corporates, especially in times of economic slowdown, where cost controls are on top of every corporate’s agenda.
Typically, they charge Rs 2,000-3,000 per night, as against a hotel, which charges about Rs 8,000-15,000 per room per night or so. The trend will see massive take off in next 3-5 years as most serviced apartments are under construction in various parts of NCR – especially Gurgaon and Delhi.”
All this started in 1998, when high-profile tenants of premium residential areas like Vasant Vihar, Jor Bagh and Sundar Nagar started demanding better value-for-money with fully furnished accommodation including accessories like computers with email, fax, telephone, wallhangings, crockery and cutlery, classic dinner set, cooking range and gas and power backup (inverter), etc – all this in addition to furniture like sofa set, bed, television, airconditioner, refrigerator, carpets and rugs, cable TV, oven, etc.
Today, agencies rent out these flats for a minimum of one month. Tenant profile reads like a virtual employee roaster of the IT industry and MNCs like McKinsey, Casio, Samsung, etc. Most of the bookings come through the website before the clients even reach Delhi.
Source- TOI


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