Invest in Service Apartments: The Smart Real Estate Model for Big Returns
Discover why service apartments are becoming a favorite among real estate investors, offering affordability and high returns without the need for a large initial investment.
Real EstateService ApartmentsInvestmentRental ReturnsProperty ManagementReal EstateJun 26, 2025
From corporate travellers and digital nomads to students and city-hoppers, the demand for service apartments is on the rise—not just in metros but also in tier-2 and tier-3 cities.
What exactly are service apartments?
Unlike traditional flats, service apartments are ready-to-move-in spaces that come with furniture, appliances, kitchen facilities, and daily-use essentials. They offer hotel-like comfort with added flexibility and privacy, ideal for medium to long stays. For businesses sending employees on assignments or professionals relocating temporarily, these spaces strike the right balance between cost and convenience.
Affordable investment, consistent income
One of the biggest attractions of service apartments is their cost-efficiency. Compared to standard residential flats, they are more affordable and easier to maintain. Yet, they fetch higher rental returns—thanks to their growing popularity and near-continuous occupancy rates. Investors also benefit from strong resale value, as the market for such units expands. Monthly rentals, especially in prime locations or business hubs, ensure a steady stream of income.
How the business model works
Typically, builders sell these units to individual investors. Once the apartments are ready, either the builder or a professional operator manages the unit. This includes bookings, housekeeping, and other guest services. The operator charges a commission from the rental income, and the remaining earnings go to the owner. The setup is simple—owners earn passive income, guests get a homely stay, and operators make a service fee. It’s a win-win model.
Growing traction across cities
Metro cities like Delhi-NCR, Mumbai, Bengaluru, and Pune have long adopted this model. But now, cities such as Jaipur, Lucknow, Indore, Chandigarh, and Dehradun are catching up quickly. New projects are being launched, and resale units are also attracting attention. “Service apartments fill the gap between hotels and conventional flats. They’re ideal for professionals, students, and short-term city visitors,” says Kushagra Ansal, Director of Ansal Housing.
More value than regular flats
Salil Kumar, Director of Business and Marketing at CRC Group, believes that service apartments offer better returns than standard flats. “With lower investment amounts and higher rental potential, they’re a practical option for first-time investors and the middle class,” he explains.
Instant shift, no setup hassle
Another appeal is that tenants can move in immediately—everything from kitchen utensils to furniture is already set up. “People today prefer compact, functional living. Service apartments answer that need,” says Umesh Rathore, Vice President of Sales and Marketing at VVIP Group.
A smarter bet for the future
The investment trend is clearly shifting. “Earlier, buyers focused only on big flats or plots. Now, smart investors are choosing options that offer regular income and future growth,” notes Sunny Katyal, Co-founder of Investors Clinic. “Service apartments fit this profile perfectly and their value will only grow from here.”
In short, service apartments are emerging as the real estate sweet spot—combining affordability, convenience, and strong earning potential. Whether you're a seasoned investor or just starting out, this model offers a practical way to earn big with a small ticket size.
Frequently Asked Questions
What are service apartments?
Service apartments are fully-furnished units that come with furniture, appliances, kitchen facilities, and daily-use essentials. They offer hotel-like comfort with added flexibility and privacy, ideal for medium to long stays.
Why are service apartments a good investment?
Service apartments are a good investment because they are more affordable than standard flats, offer higher rental returns, and have strong resale value. They are also easier to maintain and manage.
How does the business model for service apartments work?
The business model typically involves builders selling units to individual investors. Professional operators then manage the units, handling bookings, housekeeping, and other guest services. Operators charge a commission from the rental income, and the remaining earnings go to the owners.
Where are service apartments popular?
Service apartments are popular in metro cities like Delhi-NCR, Mumbai, Bengaluru, and Pune, as well as in tier-2 and tier-3 cities such as Jaipur, Lucknow, Indore, Chandigarh, and Dehradun.
Who benefits from service apartments?
Service apartments benefit investors by providing passive income, guests by offering a homely stay, and operators by generating a service fee. They are ideal for corporate travellers, digital nomads, students, and short-term city visitors.
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