Global serviced apartment brand Oakwood Worldwide has exited the Mumbai hospitality market. The company has disassociated itself with its lone under-construction project at Oakwood Premier Andheri located at Sahar.
The management contract of its sole operational property in Mumbai, Oakwood Premier, at Juhu was discontinued in November 2015 and has since been rebranded as Z Luxury Residences. Its projects in Goregaon (Mumbai), Lavasa (Pune), Gurgaon, Noida, Thiruvananthapuram, Chennai and Ahmedabad were non-starters.
The company website currently lists four operational projects in India – two properties in Bangalore and one each in Pune and Hyderabad.
Oakwood Worldwide was acquired by Singapore-headquartered Mapletree Investments last month.
The Oakwood Premier Andheri property, owned by Aristo Realty, promoters of Lloyds Steel Industries, is still stuck at cold shell stage due to lack of funds. Sources told DNA Money that this property, which was on the block for some time now, has been sold to an investor from Mozambique, Africa. Aristo Realty could be not be reached for a comment. However, sources said the project has been acquired by an African friend/relative of Mansur Mehta, who owns the Suba Group of Hotels. The deal size, the source added, could be anything between Rs 192 crore and Rs 201 crore. Aristo Realty could be not be reached for a comment.
Sources said the project has been acquired by an African friend/relative of Mansur Mehta, who owns the Suba Group of Hotels. The Andheri project spread over 380,000 square feet was planned to have 201 serviced apartments (360 bedrooms). A back-of-the-envelope calculation taking Rs 5,000 as floor space index (FSI) cost and another Rs 2,000 per square feet construction cost the total value would be upwards of Rs 200 crore. The project, being at cold shell stage, will require Rs 70-80 crore more to become operational.
On the viability of serviced apartments, industry experts said, it’s not an easy proposition. “There are certain challenges with this model. It hasn’t caught the fancy of the travellers as the average stay in Mumbai is very short. And for this business to become viable, the property will require guests staying for a minimum of two weeks,” said Abhijeet Umathe, associate director – hospitality and leisure, Knight Frank India.
Besides, from an owner’s point of view, serviced apartments call for higher square feet area as compared to hotels. “As a result, the FSI cost shoots the roof and it’s not that serviced apartments are able to charge higher rates than hotels. So the asset owner gets same FSI as a hotel and lesser keys. So the realization per apartment isn’t very attractive either,” he said.