The central government has tightened regulations on property sales since 2010, resulting in a significant drop in transactions for both new and lived-in homes since most sellers want to wait until the market improves.
This situation is expected to continue throughout 2012. Weaker sales have motivated owners to lease their units, resulting in an increase in the supply of serviced apartments.
"In the high-end serviced apartment industry, the demand for rentals remains strong since China continues to see a huge influx of foreign-invested companies," Steven Lu, cluster general manager in Shanghai for Shama, says.
The serviced apartment brand is a lifestyle provider that epitomizes comfort, style and luxury; it provides high-end serviced apartments in Shanghai, Dalian, Hong Kong and Bangkok.
Shama operates four properties in Shanghai - Shama Luxe at Xintiandi opened in 2007; Shama Xujiahui opened in 2008; Shama Luxe Huashan and Shama Century Park, both opened in 2009.
The most recently opened Shama Century Park offers tasteful accommodation - a high level of comfort and convenience. All 284 units are stylish, relaxing and spacious with private balconies, providing WiFi Internet access, washer and dryer, air-conditioning and subfloorheating, flat-screen TV with international channels and home theater system.
"When customers are going to rent a high-end serviced apartment, they consider the location, service standard, decoration and also the environment around the property," Lu says.
Shama organizes regular activities such as cooking class, sports event, spring outing, Easter egg hunting, Chinese festival celebrations, Christmas party to help tenants get to know each other and get familiar with the local culture and the community.
Shama Century Park has a heated indoor swimming pool, tennis court, fitness center with aerobics room and sauna, state-of-the-art business center, residents' lounge, children's indoor activity area, daily maid service, professional laundry and dry-cleaning services and 24-hour security service.
Rental of a fully furnished serviced apartment in Shanghai ranges from 20,000 yuan (US$3,174) to 60,000 yuan per month.
At Shama, an all-inclusive one-bedroom apartment is offered at around 25,000 yuan per month.
Most guests are expatriates who work for Fortune 500 multinational companies. Ninety percent of guests stay for more than 12 months.
Investors building high-end apartments are concerned with location, requirements of targeted customers, decoration, style and service.
Apart from ideal locations, Shama's advantage in the fiercely competitive industry lies in its "passion and unique personality," Lu says.
"Shama sees itself not only as a serviced apartment operator but a provider of luxury lifestyle."