Frasers’ serviced apartments goal: Grow to 8,500 by 2010

Frasers’ serviced apartments goal: Grow to 8,500 by 2010

 

DRIVEN by rising corporate demand, Frasers Hospitality (Frasers) expects to grow its brand of serviced apartments to 8,500 by 2010. This will involve adding 5,000 apartments under the Frasers brand in the next two years.

 

 

China, India and Vietnam are three key areas of expansion for the hospitality arm of Frasers Centrepoint, a wholly owned subsidiary of Fraser & Neave. At least 80 per cent of the 5,000 serviced apartments will come under fee-based management, said its CEO Choe Peng Sum. Frasers will acquire the remainder with balance sheet funding.

 

‘We have been very careful about over-leveraging and over-borrowing,’ said Mr Choe. Frasers currently has a 50:50 debt-equity structure, but hopes to reduce the debt component to reach 40:60 or lower going forward.

 

Frasers is also looking at more collaborations with private equity funds to acquire serviced apartments.

 

‘For serviced residences, we’ve seen a lot of pent-up demand,’ said Mr Choe. According to him, multinational corporations have been sending teams overseas to set up new operations, and serviced apartments are aptly positioned to meet expatriates’ extended-accommodation needs.

 

Yet, the number of serviced residences in major cities such as London and Tokyo add up to barely 10 per cent of total hotel inventory, he noted. On room rates, Mr Choe said: ‘Singapore itself, we have seen year-on-year growth rates of about 26 per cent.’

 

Occupancy rates are also crossing 90 per cent.

 

With the large growth potential, Mr Choe shared that Frasers is looking at creating a separate brand of serviced residences to cater to a more dynamic group of corporate guests, or ‘road warriors’.

 

Hiccups in some economies may create more chances for expansion.

 

The property market in North America has softened, said Mr Choe, and Frasers is sourcing for deals in New York. In Vietnam, falling property prices also generate investment opportunities. As to whether Frasers will set up a Reit for its properties, Mr Choe said that ‘we are waiting for the right time’.

 

The US$135 million Fraser Suites CBD in Beijing has opened for operations.

 

Source: Straits Times

 

Frasers looking to expand in China, India and Vietnam

Frasers looking to expand in China, India and Vietnam 

Hospitality arm of F&N aims to add 5,000 serviced units over next two years

 

FRASERS Hospitality, undaunted by the uncertain global economic outlook, is pursuing an aggressive expansion strategy in China, India, Vietnam and other markets.

The hospitality arm of Singapore-listed conglomerate Fraser & Neave is a ‘contrarian’ that aims to add about 5,000 serviced apartments over the next two years, despite fears of a global economic slowdown, said its chief executive Choe Peng Sum.

 

He sees ‘a lot of pent-up demand’ in cities such as Singapore, London and Sydney – where its residences have enjoyed occupancy rates of more than 90 per cent.

 

It is also the ‘right time now to get into China’ while growth opportunities are still bright in Vietnam and India, Mr Choe told a media conference yesterday to mark Frasers’ 10th anniversary, as well as to share its expansion plans.

 

In Singapore, where Frasers already operates two high-end serviced residences, it is planning a third property, but details will be released later, he said.

 

He added that Frasers has seen a robust 26 per cent rise in average room rates to about $400 per night for certain units in Singapore.

 

Farther afield, Frasers is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

 

Noting that ‘growth in Asia and Europe (for extended-stay accommodation) is just starting to take off’, Mr Choe said Frasers expects to expand its portfolio to 8,478 units by 2010.

 

It will focus on China, India and Vietnam, which have strong long-term growth momentum.

 

Frasers is targeting new property launches in cities where demand for serviced apartments has been driven up by expatriates working for multinational companies that set up shop in these countries.

 

In China, where Frasers already has 12 properties in key cities such as Beijing and Shanghai under its brand, the company is looking to grow in other cities such as Chengdu, Nanjing and Tianjin.

 

As for Vietnam, while skyrocketing inflation poses challenges for the hospitality industry, land prices are now becoming ‘more reasonable’ as land owners are more realistic in pricing. This offers opportunities for Frasers to expand there, Mr Choe added.

 

India is another key growth market for Frasers, which has seven properties scheduled to be launched there over the next three years.

 

Frasers is also in talks to set up private equity funds to invest in China, India and South-east Asia.

 

Mr Choe added that plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.

GROWING THE BUSINESS

 

Frasers Hospitality chief executive Choe Peng Sum says the company expects to expand its portfolio to 8,478 units by 2010. Besides China, India and Vietnam, it is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

 

REIT PLANS

 

Mr Choe says plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.

 

Source: Straits Times

Frasers Hospitality to its grow presence in China, India and Vietnam

Frasers Hospitality to its grow presence in China, India and Vietnam

 

SINGAPORE : Frasers Hospitality – the property arm of mainboard-listed Fraser & Neave – is planning to grow its presence in the emerging markets of China, India and Vietnam.

 

Revealing this at a news briefing on Thursday, Frasers said it plans to add about 5,000 serviced apartment units to its portfolio over the next two years. It is scheduled to open 10 new properties this year, and another 25 over 2009 and 2010.

 

Frasers believes there is room for growth in the serviced apartments sector in China, India and Vietnam, and is pumping in US$135 million for a prime property in the Beijing’s central business district.

 

That will be part of the 5,000 units that Frasers is planning to add to its portfolio. About 80 per cent will be held under fee-based management contracts.

 

Frasers has already opened two developments in Tokyo and Hanoi. Eight more will be launched within the next eight months, mainly in China, including a soft opening for its first apartment units in Hong Kong. The target is to open 25 properties within the next two years.

 

Serviced residences in most Asian countries account for about 10 per cent of the hotel inventory. Frasers said it sees more upside potential in this, especially with increased demand from multi-national corporations.

 

Choe Peng Sum, CEO of Frasers Hospitality, said: “I think the outlook for serviced apartments is (great). A lot of companies, instead of sending long-term expatriates there for 3-4 years, they are actually bringing project groups over for maybe 1-8 months, where they’ll start up the project and then fly back. That’s exactly where our market is, and a lot of our properties are seeing 80-90 per cent occupancy.”

 

Frasers is also looking at other opportunities in the Middle East, particularly in Abu Dhabi, Qatar, Oman and Kuwait, on top of recently announced Dubai and Bahrain.

 

Frasers currently has about 3,500 apartments worldwide, and it expects to have 8,478 apartments by 2010. – CNA /ls

 

Source: Channel NewsAsia

Frasers Hospitality planning global expansion

Frasers Hospitality planning global expansion

 

Frasers Hospitality is planning an aggressive expansion globally, with 5,000 serviced apartment units slated for China, India and Vietnam by 2010.

 

The property arm of mainboard-listed Fraser & Neave then plans to expand its presence in the Middle East, Australia and Europe, and maybe even enter the US.

 

Among the service apartments that will be launched by 2010, one is a 23-storey prime properrt in Beijing, in which Frasers has invested 135 million US dollars.

 

But most of the company’s other upcoming serviced apartments will be owned by other parties, and Fraser will only operate them on fee-based management contracts.

 

In fact Frasers will own only 20 percent of the upcoming 5,000 rooms to be launched in the next 3 years.

 

Chief Executive Choe Peng Sum said the expansion will help to meet the pent up demand for serviced residences around the world, and especially in cities such as China and India, which are seeing tremendous economic growth.

 

He said the demand is being created by the fact that many firms are now cutting back on long-term expatriate contracts, and instead sending project teams to stay overseas for just a year or less.

 

“If you stay for 3, 4, 5, 6, 8 months, to stay in a hotel would be a bit claustrophobic after a while. Yet if you’re not signing 1, 2 or 3-year leases, then you’re not in the apartment or condo market. So we fall right in the middle, where we meet the needs of the mid- to long-term segment.”

 

After 2010, Frasers plans to expand its presence in the Middle East, with developments slated for Abu Dhabi, Kuwait, Doha and Oman.

 

Mr Choe added that the company also plans to expand in Australia and Europe, including entry into cities such as Prague, Budapest, Madrid and Barcelona.

 

He said Frasers is even looking for possible acquisitions in New York, as the US market is now softer in the wake of the subprime and financial crisis.

 

Source: 938Live