Sun Africa Hotels Group to Put Up Luxury Serviced Apartments at Hurlingham

Sun Africa Hotels Group announced plans to put up luxury serviced apartments in Hurlingham, Kilimani, at an estimated total cost of 1 billion shillings.

The project whose completion is set for Q3’2020 will comprise of twenty studios and one-bedroom units (unit sizes undisclosed) and will target business and leisure travellers.

According to Cytonn Investments, serviced apartments have continued to gain traction in Kenya especially for use by holiday guests who are travelling as families and for business travellers looking for mid to long-term accommodation.

Unlike a hotel, a serviced apartment can easily accommodate a family in addition to giving occupants the comfort and permanence of a home but with the full benefits offered by a hotel.

Generally, the demand for high-end hospitality facilities in Nairobi has been high evidenced by data from the KNBS Economic Survey Report 2019, according to which, upmarket facilities recorded 1.4 million bed-nights in 2018, 108.7 percent higher than other lower-class facilities within Nairobi, which recorded 657,000 bed-nights.

Investors are therefore increasingly focusing on serviced apartments due to their enhanced performance, which is driven by:

1. Higher Occupancy – As per the KNBS Statistical Abstract 2017, serviced apartments registered average occupancy of 70.0 percent, in comparison to traditional hotels with 35.5 percent (KNBS). This means higher revenues for serviced apartments investors,
2. Diversification – Renowned brands stand to benefit from branded serviced apartments as they attract brand-loyal clientele. Other notable hotel groups with a serviced apartments pipeline include Marriott and Radisson Group,
3. Demand by High Net Worth Individuals – According to AfrAsia Bank Wealth Report 2019, Kenya had 8,600 high net worth individuals, out of which 6,200 were from Nairobi, with a total wealth of USD 93.0 bn, the fifth highest in Africa after South Africa, Egypt, Morocco, and Nigeria. According to the report, prime residential property constitutes 25.0 percent – 30.0 percent of these individuals’ wealth, and,
4. Growth of Meetings, Incentive, Conferences and Exhibitions (MICE) Tourism in Kenya – According to Economic Survey 2019, the number of international conferences held in Kenya expanded by 6.8 percent to 204 in 2018 compared to 191 in 2017. This was boosted by high profile international conferences held in the country and visits by foreign dignitaries during the year.

In terms of performance, according to Cytonn Investments’ 2018 Serviced Apartments Report, studios and one-bedroom units were the best performing with relatively high yields of 13.5 and 9.4 percent, respectively, in comparison to the overall market average of 7.4 percent.

Kilimani and Westlands were the best performing nodes with yields of 10.9 percent and 10.6 percent, respectively, an indicator of their potential as investment opportunities for serviced apartments.