On Tuesday 8th February 2011, the Ovolo Group recommenced sales, after a soft launch held before the Chinese New Year holidays, of 48 units at their 222 Hollywood Road address – a move that is an industry first for the Hong Kong property market. With that in mind, LOFT wonders whether serviced apartment ownership could be the next big thing for your property portfolio?
According to Gaurang Jhunjhnuwala, Business Development Executive at the Hind Group, the market response has so far been positive; so far they have had over 190 viewings of the properties which are valued from HK$8.2million to HK$13million (roughly HK$12,800 per square foot). It’s not just the smart interiors and luxury finishes that interested investors are finding enticing.
The Ovolo apartments are being offered with an attractive guaranteed return of 3.3%, a higher figure than average returns for comparable properties in the Sheung Wan area. “Without the need for renovation costs it essentially makes it a turn-key investment,” highlighted Mr. Jhunjhnuwala. Ovolo will continue to work bringing in tenants in addition to managing premises and collecting rents (which fetch on average HK$38,000/month) and distribute a guaranteed quarterly return of 3.3% to investors.
After costs Ovolo expect to collect a net yield of around 1%. Mr. Jhunjhnuwala explained that raising capital is a secondary objective for the Ovolo Group, ” Our primary goal was to see how the market would react to a concept like this, as we’ve seen it being done successfully in overseas markets in the past.”
Nonetheless, the Ovolo Group has bold vision for expansion with rumored plans to extend their influence with serviced apartment complexes in West Kowloon to open in the first quarter of 2011. According to Mr. Jhunjhnuwala they are also looking further afield, “We hope to grow our brand within the region, targeting countries such as Singapore, Japan, and Australia. The Ovolo group has appointed 3R Hospitality partners, in order to aid expansion plans within the region.”
The Hind Group don’t see “flipping” as an issue with investors at the 222 Hollywood road units, “Since Ovolo is providing an attractive yield – guaranteed at 3.3% for 2 years – we do not foresee a lot of apartment “flipping” (buying and reselling to realise short-term gains),” assures Mr. Jhunjhnuwala.
With current occupancy levels at 222 Hollywood Road steadily around 92% and the openings of establishments like 208 Duecento Otto (whose designer we interviewed in Faces) increasing the influence of the area as a hip, young neighborhood the Ovolo Group are confident the move will reap rewards for all involved.