Serviced apartments, hybrid aparthotel models and co-living are rapidly becoming one of the most investible asset classes in the UK’s living sector today, driven by shifting guest expectations, operational efficiency and an income profile that looks far less volatile than traditional hotels.
And the data backs this up - investment in serviced apartments is on the rise, with the UK market proving particularly attractive. In a ranking of 26 real estate sectors, serviced apartments climbed from 16th place in 2022 to ninth position in 2024, according to the Emerging Trends in Real Estate: Europe 2024 report by PwC and ULI. And according to Savills, in 2024 and the first half of 2025, around £500 million worth of serviced apartment deals were completed in the UK.
Laying it bare
At this year’s AHC, the session Flexible stays, fixed returns: Unlocking value in serviced and hybrid living will bring together a cross section of industry experts to unpack the drivers behind this momentum and share shiny nuggets of wisdom.
Speaking with Hospitality Investor ahead of this year’s conference, SmartRental CEO Carlos Escoda, CBRE associate director Ellina Kraynik, Vertiq Capital founder Erik Jacons and The Ascott development director Marcel Lindt highlight a surge in appetite. Recent transactions underline the point. Last year, CBRE brokered the sale of the Residence Inn portfolio for Starwood Capital last year, attracting operators which were offering rents of around £30,000 per room, a figure that underscores how hot the asset class has become.
And for operators, the draw is clear, with Escoda noting “We see strong weekend demand from the leisure segment, while during the week other needs come into play that traditional hotels can’t fulfil. Separately, we’re also seeing a lot of demand from younger people.”
The appeal is equally clear to global players. Lindt says The Ascott has shifted from pure serviced apartments into flexible hybrids. “Even with our core Citadines brand, it’s really a hybrid between a hotel and aparthotel. With lyf, we’re combining co-living and hotel.”
Risk
From a capital markets perspective, yields on serviced and hybrid assets are competitive. Jacobs puts the range between 5–10 per cent depending on location, lease structure and operator. “One of the reasons investors generally like this relative to hotels is the relative stability of the income stream. It is perceived to have a more resi-like income profile and therefore investors see less risk.”
But of course, nothing comes without risk, our panellists say, as they share notes on what to watch out for, how to surmount challenges and what the funding is interested in. But don’t expect us to tell you everything here! Jjoin us at the Annual Hotel Conference to hear first-hand how best to capitalise on the growing wave of serviced and hybrid living in UK hospitality.
With conversions gathering pace, branding still underpenetrated according to CBRE analysis and new hybrids emerging, it seems the question is not whether to engage but rather, how.