Investing in real estate is always relevant, because it brings the investor a stable passive income. Previously, investments in residential real estate, in particular in apartments for rent, were popular. Gradually, this is being replaced by a better and more profitable service that does not require additional time and other resources of the owner. We're talking about an aparthotel. This format has not yet become as widespread on the Ukrainian market as it is in Europe, but it is only a matter of time. Thus, one of the participants in this sector is the network of apart-hotels or tenement houses WOL Home + Hotel, which is part of the Ribas Hotels Group brand portfolio.
What attracts WOL to users?
“When creating this format, we wanted to provide people who are looking for apartments for short or long term rental with an alternative option with hotel service. So that the guest does not face many inconveniences when entering the apart-hotel, as when renting an apartment,” said Maria Turikova, project manager at Ribas Hotels Group.
In the WOL project, the Ribas Hotels Group team has solved all the problems that people face when renting an apartment. First of all, a survey was conducted among the audience - those who rent apartments. Among the main problems they cited were:
- difficulty in finding an apartment;
- fraud on rental sites;
- negative experience of contact with realtors;
- constant repairs at the neighbors;
- lack of household appliances;
- non-ergonomic spaces;
- poor-quality infrastructure of the home.
All apartments are equipped in the same way, they differ only in area, that is, a studio is 25 m², one-room apartments are 35 m² and two-room apartments are 55-65 m²
The target audience of WOL are young, dynamic representatives of the creative industries, as well as those who work remotely. These are rational guests who want quality and are ready to sacrifice space for this. For this they receive certain bonuses. Namely, that you can rent an apartment for any period of stay without commissions and prepayments. In addition, WOL does not discriminate against guests on the basis of the presence of animals, children. For example, there are apartments for allergy sufferers, without animals, and a floor where you can live with your pets.
There are three types of apartments in the WOL concept: studio, studio + bedroom and studio + two bedrooms. All apartments are equipped in the same way, they differ only in area, that is, a studio is 25 m², one-room apartments are 35 m² and two-room apartments are 55-65 m². All of them have the necessary amount of furniture and household appliances for a comfortable stay.
One floor is allocated under the infrastructure of the first implemented chain object - WOL.121 in Odessa. A gym with a terrace was placed there, where in the summer you can do yoga, watch dusk and dawn.
“Another element of the infrastructure is coworking. Its necessity at the WOL.121 apart-hotel did not raise any doubts, because we started designing already in the conditions of COVID-19 and knew that many people were now switching to work at home. That’s why we wanted to create a space where it’s great to work and communicate,” said Maria Turikova.
Apart-hotel WOL.121, due to its proximity to the sea, has rooms for both short and long stays
Choice of locations for apart-hotels
The ratio of types of apartments in it depends on the choice of the location of the object. That is, if an apart-hotel was built closer to the central part of the city, apartments with a small area will prevail in it. Up to the fact that a part can be an ordinary number of rooms without a kitchen. Yet short-term rentals dictate a higher ADR (average price per room/night). And it is not interesting for a developer to build a complex that will focus only on long-term lease.
For the location of WOL apart-hotels, some recreational areas are also considered. In this case, the ratio will be in favor of a long-term lease, because there you can sell large apartments.
Apart-hotel WOL.121, due to its proximity to the sea, has rooms for both short and long stays. “At the same time, this location is not popular for business activity, so we understand that in May-September we will be dominated by guests who will stay for a short time, like in a hotel. From the end of September till April, most people will visit for a long time,” said Artur Lupashko, founder of the Ribas Hotels chain.
The company also plans to open apart-hotels of the WOL brand in Kyiv, Nikolaev, Poltava and Lviv.
Investors will choose the format of payments - a fixed rental rate or a percentage of the total income of the object and receive a guaranteed profit
Profitable business model
In terms of the business model, the WOL Apart-hotel will offer apartments for sale to investors. Investors will choose the format of payments - a fixed rental rate or a percentage of the total income of the object and receive a guaranteed profit.
This business model is a triple union: a hotel operator providing its concept, developer providing services in construction, and an investor. And in this case, win-win-win will be when the developer builds the complex designed by Ribas Hotels Group on time, and after putting it into operation, the last one will provide the investor with quality management services.
There are many micro-investors on the market who want to earn passive income. Buying an apartment in an apart-hotel is about this.
In the case of WOL, the investor pays $2000-2500/m² depending on the location and receives the apartments within the specified time frame
Among the main advantages of investing in an apartment hotel:
- No link to location. This product is interesting for investment, at least due to the fact that the investor is not tied to the location of the object. Compared to investing in an ordinary apartment, it requires a physical presence in that city. In the case of profitable real estate, the investor gravitates only to the location where the profitability is higher.
- Tools for remote control. Now the Ribas Hotels Group team is implementing an application for investors WOL, thanks to which it will be possible to remotely control the physical condition of the apartments. There will be photo and video reports after general cleaning, a visit log, a booking calendar and much more. And these features are available online from anywhere in the world. This is one of the most significant advantages compared to renting an apartment.
- Fixed price per m2. In the European and even Georgian markets, apart-hotels or tenement houses have long been more in demand than just investing in an apartment in a new building. It is more rational to buy a finished product, because there is a fixed price for it. In the case of WOL, the investor pays $2000-2500/m² depending on the location and receives the apartments within the specified time frame.
- High profitability. Profitability of WOL will be about $15/m² and will have a payback of about 10% per annum. These numbers are close to commercial real estate. If you lease an apartment on your own, then the payback will be 5%, and, accordingly, the profitability will be lower.
“So far, we see that consumers are getting used to quality service. We assume that with the advent of this kind of object, the rental property market will transform and change for the better. And guests will more often choose apartments with a full service cycle and high-quality infrastructure,” summed up Artur Lupashko.
Watch the video review of the concept of the WOL Home + Hotel project on our YouTube channel.