Archives for posts with tag: quest serviced apartments

CapitaLand’s serviced residence unit, The Ascott Limited (Ascott) – the world’s largest international serviced residence owner-operator, has entered into a strategic partnership with Quest Serviced Apartments (Quest) – the largest serviced apartment provider with 112 properties in Australia.

Ascott expects to invest up to AUD500 million (S$560 million) to acquire new properties that Quest will secure for its franchise in Australia over the next five years. Ascott will have a right of first refusal to acquire the properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.

In addition, Ascott has signed an agreement to acquire a 20% stake in Quest for AUD28.8 million (S$32.3 million). As part of the agreement, Ascott has the option to increase its stake in Quest to 30%.

Ascott Reit Expands To Greater Sydney By Acquiring Three Serviced Residences For AUD83.0 Million

In a separate agreement, Ascott’s real estate investment trust, Ascott Residence Trust (Ascott Reit), will acquire three operating serviced residences in Greater Sydney from Quest for AUD83.0 million (approximately S$93.0 million). These are Ascott Reit’s maiden acquisitions in New South Wales.

Ascott logoQuest serviced apartment

The accretive acquisitions at an EBITDA yield of 7.7% are expected to increase Ascott Reit’s FY 2013 distribution per unit from 8.40 cents to 8.46 cents on a pro forma basis.

Ascott Reit will receive fixed rent by taking over the leases for the three serviced residences – Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot – and they will continue to be operated under franchises using the Quest brand.

From : http://www.hsyndicate.org/

Serviced apartment operator Quest has expanded by 28% in the past two years and is now the fastest growing player globally, according to a new report.

Quest’s expansion comes as the serviced apartment sector continues to expand in Australia and New Zealand with a 14.5% increase in supply since 2011.

“Australian serviced apartments are in high demand and short supply; a trend that shows no sign of slowing,” notes the UK-based Travel Intelligence Network, authors of the Global Serviced Apartments Industry Report 2013/14.

Quest is now second only to Mantra in terms of serviced apartment room numbers.

Mantra offers 13,600 rooms in 150 locations spread across Australia and New Zealand with Quest offering 6,786 rooms across 120 locations.
serviced_apartments Australia
The other major operators in what is a very fragmented market are Oak Apartments and Mercure (owned by Accor), which both offer more than 4,000 serviced apartments and Harry Triguboff’s Meriton Group (2,674 apartments), which has plans to expand this side of its business.

The biggest operator globally is the Marriott group through its Residence Inn serviced apartment business, which operates more than 90,000 apartments in the US and Canada.

Quest chairman and founder Paul Constantinou attributes the growth in Australia to the country becoming de-centralised; “former regional towns are now regional cities, and the lack of accommodation in these areas is being addressed by serviced apartments rather than mainstream hotels”.

“Although Australia has major international centres, the hotel chains tend to be concentrated in the main cities,” he says.

Constantinou says the sector is being driven by demand from the extended stay market, where demand has grown by 30% due to companies expanding and more consultants finding themselves on the road to service their customers.

The report also quotes research by Atchison Consultants which forecasts the Australian serviced apartments sector to outperform the hotel sector over the next three years

Atchison Consultants forecasts investor returns of between 13% and 15% per annum compared to 10% and 11% for hotels and also estimates – on the back of a 10% rise in business travellers to Australian in 2011 – that business travellers account for 50% of guests who stay in serviced apartments, attracted by the lower costs compared to hotels.

A separate report by Jones Lang LaSalle (JLL) Hotels found that of the 3,712 hotel rooms under construction in September 2012, a third were serviced apartments – though JLL warns that serviced apartments will have to show a positive yield for at least three years to tempt back investors.
According to the global 2013 report, this is already happening with the sector is attracting new investors and is benefiting from increasing numbers of business travellers to Australia.

The report says serviced apartment rental rates in Australia and New Zealand are the most expensive in the Asia Pacific region, ranging from $110 to $200 per night for a studio apartment to $180 to $275 for a two-bedroom apartment.

Quest is currently selling investments in its Quest Rockhampton development offering rental returns of 6.5%, increasing by 4% per annum.

In May, Quest listed its Sydney Olympic Park apartment hotel for sale seeking around $39 million as it looks to free up cash to fund the development of more than a dozen new serviced apartment projects and tap into growing investor demand for Australian hotels and serviced apartments, particularly from Asian investors.

Australia’s serviced apartment sector dates back to the 1970s, but the real growth spurt occurred in the build-up to the Sydney Olympics with the number of establishments with 15 rooms or more growing from 479 in 1998 to 973 by March 2011.

It ranked as seventh biggest apartment globally in 2011-12, up from 10 in an earlier survey.

Source : http://www.propertyobserver.com.au

Quest Serviced Apartments is set to add to their accommodation offering in Auckland with the opening of a new property in East Tamaki.

questhighbrook.co.nz

Quest Highbrook will open on 12 August and is a new superbly appointed 62-room complex consisting of 36 studios, 18 one bedroom apartments, four two bedroom apartments and four disabled access studio apartments.

Each apartment has a fully equipped kitchen, private laundry and spacious living and dining areas. Other amenities include Quest’s pantry shopping service, free in-room Wi-Fi, chargeback facilities with local restaurants, valet dry cleaning, babysitting service, meeting room and an onsite car park.

The property is conveniently located within The Crossings precinct and is adjacent to the conference centre run by Waipuna. The Crossings is fast becoming a convenient service centre for the Highbrook community with five restaurants, cafes, banks and a convenience store. Future development plans for The Crossings include a large concourse featuring an open fireplace, outdoor eating and additional entertainment options.

Quest Serviced Apartments New Zealand CEO Stephen Mansfield says Quest Highbrook offers guests an excellent alternative to the traditional motel or hotel accommodation in the growing Highbrook/East Tamaki business hub.

“It is fantastic to be opening a Quest property in this area as this is where many national and corporate offices are located. Quest is further cementing its position as the leading serviced apartment provider for the business, corporate and leisure traveller who want to enjoy high-quality, affordable and spacious accommodation. With Quest Highbrook we can offer guests a fresh, new approach to accommodation and all within close proximity to Highbrook’s business hub.”

Quest Highbrook Franchise Directors Brendan and Keld Kelly both have vast experience in the hospitality sector after working in Europe. “Quest takes a business approach to the hospitality sector that is built on consistency and sustainability which is why joining Quest appealed to us. The Highbrook area is an exciting place to be with the development of supermarkets, restaurants, cafes, conference and meeting facilities as well as convenient access to public transport. This will help us to meet the needs and expectations of our corporate and non-corporate travellers alike.”

Quest Serviced Apartments has emerged as the fastest growing serviced apartment provider in the world, although the sector remained in short supply in the Australian market in 2012.PaulConstantinouQUEST_140

The Global Serviced Apartment Industry Report 2013/14 revealed that the Australian company’s supply has risen by 28% in 2013 as compared with 2011.

It is followed by US-based Oakwood with 21.3% and Singaporean firm Frasers with 9.2%.

Other major players in the Australian market, after Quest, were revealed as Oaks Hotels & Resorts, the Mantra Group and Mirvac which is now part of Accor.

“Corporate customers are increasingly doing their business outside of major city centres, gravitating towards regional and suburban hubs where government infrastructure is supporting industry growth and development,” it said.

“In turn, this is driving demand for extended stay accommodation.”

However, the report also found that Australian serviced apartments remain in short supply as demand grows.

Global economic conditions present a major challenge for the sector with banks reluctant to fund new developments. In fact, the report found that, despite Australasian growth of 14.5% in the number of apartments since 2011, Australian serviced apartment supply actually declined in real terms against demand in 2012 after over a decade of consistent growth.

Operators highlighted obstacles as restrictive local planning schemes, excessive bureaucracy and lack of understanding around investment models with funding, land availability and competition from other property sectors also factors.

“The difficulties operators encounter raising the necessary capital for their projects reflects Australasia’s financial markets’ lack of understanding of serviced apartments,” Quest executive chairman, Paul Constantinou, said.

But despite these challenges, the sector will grow to 30% of the total Australian accommodation market in the coming years – up from 25% at present, and up from 10% in 1999.

In addition, it is expected to outperform the hotel sector over the next three years, according to Atchison consultants. The company has forecast returns of between 13% and 15% for serviced apartments as compared with between 10% and 11% for hotels.

Meanwhile, Australasia was revealed as the most expensive region in which to stay in a serviced apartment with studio apartments starting from US$114 per night.

Source : http://www.travelweekly.com.au

quest serviced apartmentThe Quest Serviced Apartments network continues to expand into the growing regional hubs and suburban growth corridors across Australia, with the company today opening its second Frankston property, Quest Frankston on the Bay.

The 82 apartment Quest Studios property occupies four floors within the new 10 story Peninsula on the Bay complex located in Frankston at 435 – 437 Nepean Highway. Quest Serviced Apartments Chairman, Paul Constantinou said the opening is in line with the company’s growth strategy, which seeks out locations that will support a successful accommodation business for the long term.

“Frankston’s foothold as an industrial hub is predicted to grow, with the Port of Hastings slated as a key future transport and shipping hub. In the interim, sustained investment is driving demand for quality accommodation such as ours from health facilities, business parks and the increased tourism offering along the peninsula,” Mr Constantinou said.
The property is the sixth under the Quest Studios brand, a sub-brand developed in response to research that extended-stay business travellers value absolute flexibility.

Also housed within the complex will be restaurants run by the likes of Paul Mathis (Taxi Dining Room, Blue Train, Soul Mama), Ella Bache, a gym, commercial space and residential apartments. Will Deague, CEO, Asian Pacific Group said, “We have owned the former Peninsula Centre since 2008 and have just undertaken a $28 million redevelopment.

“We are proud to be part of the rejuvenation of the Frankston area and delighted to partner with Australia’s leading serviced apartment accommodation operator in the process. This is the 5th development Asian Pacific Group has completed with Quest,” Mr Deague added.

The studios and one bedroom apartments offer guests a hotel-style room with the facilities and flexibility of an apartment, including a kitchenette, dedicated work area, complimentary WiFi and multi-device charging station.
Guests have access to conference facilities and Quest services such as pantry shopping, dry cleaning, restaurant charge-back, baby-sitting booking and business administration.

In 2013, Quest Serviced Apartments is also opening another five Australian properties in Adelaide’s CBD, Rockhampton (QLD), Wodonga (VIC), Mackay (QLD) and Albury (NSW). Three New Zealand properties will also open this year in Highbrook, Christchurch and Beaumont.

source : http://www.etravelblackboardasia.com/

Serviced apartment group Quest has announced plans to build ten new apartment buildings in NSW by 2014.

These are in addition to three new properties that will open in Queensland, one in outer Melbourne, one in regional Victoria and another in the Adelaide CBD this year.

New serviced apartments will be built in Albury, Shellharbour, Nowra, Orange and Liverpool with five further locations yet to be revealed.

The announcement was made by Quest chairman Paul Constantinou alongside NSW premier Barry O’Farrell at the opening of the group’s latest property at Sydney Olympic Park.

The increase in accommodation will be aimed at extended-stay business travellers.

The new buildings will increase Quests total stock of rooms by over 70%, taking pressure off existing apartments targeting business travellers of four or more nights per stay.

“This investment follows the increasing need by business travellers for accommodation in the State’s regional and suburban hubs where traditional accommodation options are no longer meeting their needs,” says Constantinou.

“This year, we will commence construction at five new locations – in Albury, Shellharbour, Nowra, Orange and Liverpool. We will continue this expansion, with another five properties to commence in the following year.”

Quest currently has 21 properties in NSW, providing accommodation to approximately 120,000 extended stay business travellers.
On completion of these projects, Quest aims to have a total of 2,365 rooms in NSW hosting around 200,000 travellers annually.

Quest will build serviced apartments in regional areas where the NSW government is spending on infrastructure.

“Quest is building properties in areas where there has been significant investment in public and private infrastructure such as roads and rail, hospitals, educational institutions and retail precincts.”

“This commitment to investment in thriving regional and suburban locations across NSW demonstrates business confidence in long term growth across the State,” said O’Farrell.

quest serviced apartment

 

The group has been active in recent years with its expansionary plans.

In July last year, Quest agreed to lease all 131 apartments that form the residential component of the Kyren Group’s $100 million mixed-use building in the Adelaide CBD.

In May last year Quest signed a lease with the Deague family’s Asian Pacific Group for a $50 million refurbishment of the Peninsula Centre in Frankston. This project consists of 81 serviced apartments within the 150 apartment building, to be completed in early 2013.

Established in 1988, Quest currently has 140 properties across Australia, New Zealand and Fiji.

Source : http://www.propertyobserver.com.au

The $11 million property is close to the airport, Westlands Shopping Centre and Civic Park, and is the second site for franchisees Jennifer McDonnell and Daniel Wilson.

McDonell said “We have seen the ongoing rise in demand from extended stay business travelers through our time as franchisees at Quest Whyalla Playford. More and more people are coming to Whyalla to work and base themselves here for extended periods.

“The support from the local community for our second venture, catering to this growth, has been exceptional,” she said.

The 4.5 star property has 56 studio, one and two bedroom apartments.

Andrew Weisz, general manager – locations, Quest Serviced Apartments, highlighted the partnership with the South Australian Tourism Commission as key to getting the project off the ground.

“We worked closely with the South Australian Tourism Commission from the project’s inception – looking at the area, the current market and the future growth.

“There is a large, under-supplied market here, drawn by the long term development of the resource industry, and the subsequent significant infrastructure investment,” Weisz said.

Source : http://www.franchise.net.au

Quest Serviced Apartments has opened its $11 million complex in Whyalla (near Adelaide)  despite the backdrop of the mining boom slowdown.

Quest Whyalla will have 56 studio, one-bedroom, two-bedroom and three-bedroom self-contained apartments.

Quest chairman Paul Constantinou says the Whyalla opening comes as direct response to the region’s “tenacious” growth.

“Whyalla is thriving, fuelled by long-term development of the resource industry, which has, in turn, brought significant investment in local infrastructure.

“This growth is continuing to stimulate demand for functional and flexible corporate accommodation – a demand that we make it our business to respond to,” Constantinou says.

Franchisee Jennifer McDonnell says there has been an increasing demand for self-contained accommodation in Whyalla.

The 4.5-star property is one of eight new Quest Serviced Apartment properties opening in the 2012-13 financial year.

Quest, which is also set to open at Sydney Olympic Park next month, has 140 complexes across Australia, Fiji and New Zealand, spread across central business districts, suburban and regional areas with proximity to head offices, business centres and key tourist destinations.

Sydney Olympic Park complex is set amid offices and business parks. Elsewhere is NSW, there is also a site at Shellharbour judged to be set to benefit from the growth in Wollongong as well as the new Stockland development at Shellharbour.

In Melbourne Quest have targeted country regions such as Bendigo along with Docklands aimed at visitors who don’t want to pay the high five-star-hotel prices.

Founded in 1988 by Paul Constantinou with one hotel in Fitzroy, the group offers apartments for short or longer stays, complete with kitchens and laundries.

Investors can buy strata units with building management run by franchisees, who must adhere to Quest management standards.

The Wyyalla town recently attracted attention after federal opposition leader Tony Abbott suggested the carbon tax would destroy the town, which triggered a comical response from Labor hovernment minister Craig Emerson.

Although BHP’s expansion plans are on hold, mining company Arrium has reopened its Iron Baron Mine, in a move that state Mineral Resources and Energy Minister Tom Koutsantonis says is a sign of the rejuvenation of South Australia.

Closed in the early 1990s, the mine near Whyalla was officially reopened on September 18 this year.

The reopening is due to create about 100 jobs and to support businesses in the area.

Arrium Mining chief executive Greg Waters says Iron Baron is just one part of its larger South Australian investment program, which includes its Middleback Ranges projects, Southern Iron operations near Coober Pedy, and its ongoing Whyalla port expansion.

The Federal Minister for Regional Australia, Simon Crean, South Australian Manufacturing and Trade Minister Tom Koutsantonis and president of the Local Government Association Kym McHugh recently signed an agreement to work together on promotion of the upper Spencer Gulf region to mining companies.

Whyalla is the leading South Australia area where it’s cheaper to buy than rent.

Rents in Whyalla had grown 10.7% to $310 per week in the five years to May 2012. Median rents are now at $350, according to RP Data.

Source : http://www.propertyobserver.com.au

The serviced apartments sector is forecast to outperform the hotel sector over the next three years, according to the latest Serviced Apartments Review by Atchison Consultants.

Atchison Consultants is forecasting total returns of between 13% and 15% per annum on an ungeared basis for serviced apartments, while total returns for hotels are expected to range between 10% to 11% per annum.

“Rental growth in line with CPI is expected [for serviced apartments]. Occupancy rates will reflect growth in GDP, which will remain positive,” says the report.

However a seperate report by Jones Lang LaSalle Hotels (JLLH) says “mum and dad” investors are cautious about investing in serviced apartments due to the negative economic outlook and negative yield spread on new projects under construction.

According to JLLH there 3,712 hotel rooms under construction at the end of September last year of which about a third were serviced apartments.

JLLH’s managing director of strategic advisory Troy Craig says serviced apartments would have to show a positive yield spread for at least three years to tempt back retail investors.

On the other hand he says the growth in the apartment-style product shows consumer eagerness to “trade location for space, if offered at a similar price point” representing “an important trend for the industry, particurlarly given Australia’s ageing hotel stock”.

Paul Constantinou, chairman of Quest Serviced Apartments, which has the largest share of a very fragmented market (6%), says investors collectively own more than 5,000 individual Quest apartments.
However, he says these investments have to date been “unstructured and very disparate”, sourced and sold through a channels ranging from real estate agents and financial planners to the developers themselves.

Quest has set up a specialist property investment arm called Quest Properties to help fund expansion of its portfolio and “wrestle back control.

“We are at the tipping point now where in order to grow at the rate required to meet corporate demand for our product we need a dedicated division to facilitate new investment in our business,” he says.

Constantinou says serviced apartments look and feel like residential investments, without the typical frustrations like vacancies, repair and maintenance obligations, body corporate charges and real estate agent and property management fees.
He says the Quest offering promises a fixed 6.5% income return plus capital growth, no management fees and with maintenance managed by Quest.

“It’s a true set-and-forget investment,” he says.

The appeal of serviced apartments has also caught the eye of Harry Triguboff’s Meriton group, which plans to build 700 serviced apartments across Australia in 2012 and has recently acquired two sites in Sydney, which will include serviced apartments in the mix.

The sector is also set to benefit from increasing numbers of business travellers to Australia, which according to Atchison Consultants now account for 50% of guests who stay in serviced apartments.

Departure and arrival data from the ABS shows a 10% increase in the number of business travellers over the past year, with 845,000 coming in 2011 compared with 768,000 in 2010.

This is above the 10 year average annual rate of corporate traveller growth of 4.6%.

This growth in corporate visitors was highlighted this month by assistant RBA governor Philip Lowe, who said conditions were “noticeably stronger in the accommodation sectors in some of the large cities, which are benefiting from an increase in business travel and an apparent shift in preferences by overseas tourists for city-based experiences”.

According to BIS Shrapnel chief economist Frank Gelber, capital city hotels (which compete with serviced apartments) will be the best-performing commercial property sector in 2012.

“Why? In a nutshell because business travel has recovered. Both domestic and inbound,’ Gelber said in a column for The Australian.

“Performance of serviced apartments relies on continuing growth in corporate travel,” say Ken Smith and Ken Atchison, authors of the Atchison report.

“[The serviced apartments sector] has a competitive cost advantage over hotels as its nearest competitor in corporate accommodation, which is beneficial at a time when both business and consumer sentiment is fragile,” they say.

In line with a positive earnings trend, serviced apartments have attracted a growing share of the accommodation market.

In addition, demand for serviced apartments as measured by room nights sold was significantly higher than hotels and motels for years between 1999 and 2008, with the exception of 2007.

The number of room nights sold in serviced apartments as of 2011 was 3.3 million, representing a 72% increase since 2001.

The sector is highly fragmented, and no one player has a significant market share.

The biggest players are Quest (6%), Oaks Hotels and Resorts (5.7%), the Mantra Group (5.1%) and Mirvac (3.2%).

According to Atchison Consultants, since the beginning of 2009 occupancy rates have averaged above 80%, and this high occupancy is expected to continue in the absence of new supply.

While the sector dates back to the 1970s, the real growth spurt occurred in the build-up to the Sydney Olympics with the number of establishments with 15 rooms or more growing from 479 in 1998 to 973 by March 2011.

“Investment attributes of serviced apartments include direct property exposure with a relatively affordable price entry point usually on a long-term lease with contracted periodic rental uplift, tax and depreciation benefits and alternative use through conversion to residential,” says the Atchison Consultants review.

Under most arrangements the business risk is borne by the accommodation business, which leases the apartment from the investor with average lease terms spanning five to 10 years.

According to IBISWorld, as of 2011, the industry comprised more than 1,200 operators with more than 1,300 establishments. At the end of the 2011 financial year, the industry employed over 16,000 people, generating approximately $2.3 billion of revenue. The estimated value of the serviced apartment sector is $8 billion.

Property investors can participate in the serviced apartments sector by purchasing a strata title and leasing it to an accommodation business. Serviced apartments can also be incorporated as part of a self-managed super fund.

from : http://www.propertyobserver.com.au

QUEST Serviced Apartments has launched a new dedicated business division, Quest Properties, to bolster its expansion plans.
The company aims to increase the number of Australians directly investing in the properties it manages, to make it easier to attract developers to build new sites.
Chairman Paul Constantinou said Quest needed property developers who were prepared to build its properties.
”In turn, they need investors who will purchase the end product,” he said. ”The establishment of Quest Properties will enable this to occur more effectively.”
Under present arrangements, investors collectively own more than 5000 individual Quest apartments. These have been sourced through real estate agents, financial planners and developers.
”It has been unstructured and very disparate,” Mr Constantinou said.
”This has led to a lot of confusion about the nature of serviced apartment investments and how our own Quest product fits in.”
Mr Constantinou said Quest Properties would provide investors with a single point of contact for all their queries, and a trusted source of information about the Quest investment product and serviced apartment industry.
A CBRE Hotels report found that Quest, established in Melbourne in the 1980s, is now the largest and fastest-growing serviced apartment operator in Australia. It has more than 100 establishments in Australia, and more than 130 overseas.
Serviced apartments have tapped into travellers’ and business people’s desire for independence.
The sector has carved out a big share of the travel market in the past 25 years – about 24 per cent of supply, according to the Bureau of Statistics.
The serviced apartment has in-room cooking, washing, working and living space that is not offered in a lot of other accommodation. Unlike hotels, there is minimal food and beverages, giving the customer flexibility and saving the operator having to run such a marginal revenue stream.

from: http://www.brisbanetimes.com.au