A busy summer ahead for the serviced apartment sector

In 2024 and the first half of 2025, approximately £500 million worth of deals were completed in the UK, with an additional £700 million expected to close over the coming months.

The sector, comprising around 29,500 apartments across 800 properties in the UK, is strategically positioned for growth. London alone is home to nearly half of these apartments (14,100), representing 9% of the city’s overall accommodation supply. Despite its relatively small size, the sector has caught the eye of investors due to its clear growth potential and downside risk protection.

Investor appeal 

Investors are drawn to the sector’s ability to enhance revenue through increased guest demand, brand development, and scalability. Additionally, the lean business model of aparthotels and serviced apartments is well placed to weather challenges, including rising labour costs and taxes, including recent national insurance changes and upcoming business rates revaluations. Savills data indicates that net profit margins for these properties can be approximately 15 percentage points higher than those of full-service hotels, with potential for even greater profitability in many cases.

The 2025 Savills Operational Real Estate investor survey illustrates buyer confidence, with serviced apartments ranking highest among all hotel sub-segments for UK and European investors’ three-year target plans. This highlights the sector’s importance and potential to deliver substantial returns.

Recent transactions

Over the past year, several significant property transactions have taken place in London. One of the most notable deals was the sale of the Residence Inn by Marriott Portfolio, which includes 503 high-performing apartments located in Tower Bridge, London Bridge and Kensington Olympia. This portfolio was sold to Pandox for £230 million.

Also of note was Savills sale of the Halcyon portfolio, comprising 52 apartments and commercial space spread across three properties in the City of London. Additionally, Savills advising on the sale of the City Apartments portfolio marked a significant platform sale of an established London operator.

Mayfair House Apartments also transacted, comprising 25 serviced apartments in a prime location, offering substantial opportunities for repositioning.

Current opportunities

The market currently has several acquisition and refinance opportunities. The most significant of these is the Supercity Aparthotel portfolio and platform, which has recently been put up for sale at a price of £220 million. This extensive portfolio comprises over 450 apartments spread across properties in London, Edinburgh, Brighton, Manchester, Leeds, and York. Additionally, Grand Plaza Serviced Apartments in Bayswater, which consists of 198 units, has been launched for sale at £100 million. On top of this, more than £300 million worth of off-market transactions are expected to close in the coming weeks.

Large single asset refinancings are also in play. Competition within debt markets is leading some owners to explore debt solutions rather than outright sales. New developments, conversions from other uses, and the repositioning of existing hotels and apartments remain viable options in the right locations. The luxury segment continues to be undersupplied, presenting a unique value-add opportunity for investors.

The future

The serviced apartment and aparthotel sector is poised for a busy summer. With substantial investments already made and more on the horizon, the sector’s growth trajectory is clear. The strategic positioning of these properties and city locations, combined with their robust business models, makes them attractive to investors seeking both profitability and resilience. 

The future looks bright for this dynamic and growing segment of the market.

Further information

Contact James Bradley

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