Global leader in serviced residence industry

Business Times - 04 Aug 2009

Ascott plans to expand its presence through management contracts and selective investments in the Asia-Pacific, Europe and the Gulf region, reports UMA SHANKARI

HOMEGROWN serviced residence firm The Ascott Group has come a long way since it was set up 25 years ago. In 1984, Ascott pioneered the serviced residence concept with one property each in Singapore (The Ascott Singapore) and France (Citadines La Defense). But over the past 25 years, Ascott has grown to be the world's largest serviced residence owner-operator, with 25,000 units in 66 cities in 22 countries. Ascott currently has 190 properties in the Asia-Pacific, Europe and the Gulf region.

But growth did not come without a lot of hard work and strategising. The company has three brands under its umbrella - Ascott, Somerset and Citadines - and all three have contributed to the company's growth. Ascott, in fact, acquired Citadines, an established brand of serviced residences in Europe, in 2004 to expand its global footprint to offer travellers more choices. The acquisition added over 5,000 apartment units to its portfolio and extended its presence to 18 cities across Belgium, France, Germany, Spain and the UK. The acquisition enabled Ascott to build itself into a global business with greater economies of scale.

Now, the three brands offer distinct products, allowing the company to target different kinds of customers as it grows. Ascott also established the world's first pan-Asian serviced residence real restate investment trust, Ascott Residence Trust, in 2006, which allowed it to grow using a different platform. By taking over ownership of stable yielding assets, Ascott Reit frees up the capital from these stable yielding assets. This capital allows Ascott to continue to acquire, develop, incubate and grow its portfolio of serviced residence assets. When these assets achieve stable yield, Ascott can then consider them for divestment to Ascott Reit or other third parties. Today, Ascott Reit's portfolio comprises 3,644 apartment units in 38 properties, located in 11 cities across seven countries - Australia, China, Indonesia, Japan, Philippines, Singapore and Vietnam.

Ascott now has formidable economies of scale to draw from. 'Our global presence gives us economies of scale and cross-selling opportunities across different regions and properties,' says Lim Ming Yan, chief executive of Ascott, who is also the deputy chairman of the CapitaLand China executive committee.ÂÂ

Ascott is a unit of CapitaLand, Singapore's largest property group by market capitalisation. As with its parent company, which has expanded its geographic presence significantly over the past few years, Ascott has pushed out into new markets whenever the right opportunities arose. The company moved into the Gulf region and India in 2006. It also expanded its presence in Australia with the first Citadines property in the country recently.

And with CapitaLand's move to take Ascott private in 2008, the expansion looks set to continue. The successful privatisation, Ascott hopes, will accelerate the company's growth in key markets by tapping CapitaLand's more established network, real estate development and financial services capabilities.

'Prior to privatisation, we had many shareholders. Now Ascott has the focus and support from one strong shareholder, CapitaLand, which will further enhance Ascott's position as a global leader in the serviced residence industry,' says Mr Lim.

Looking ahead, Ascott plans to expand its presence through management contracts and selective investments in the Asia-Pacific, Europe and the Gulf region, both in existing cities where it already owns properties and in new markets where the company sees potential demand.

'For example, China will continue to grow and we see attractive long-term business opportunities as demand for quality, international-class accommodation grows,' says Mr Lim. 'Although we are already the largest international serviced residence operator in China with more than 5,000 serviced residence units in 26 properties across 12 cities, we will continue to grow our presence in the first and second-tier cities in China.'ÂÂ

Ascott would also like to strengthen its presence in key gateway cities in western Europe, in countries such as the UK, France and Germany, where it already has properties, to achieve greater economies of scale. In addition, it has started venturing into new, emerging markets in other parts of Europe, such as Georgia and Kazakhstan where the serviced residence sector is largely untapped. 'We plan to open our first property in Georgia by the end of this year and our first one in Kazakhstan in the second half of 2010,' adds Mr Lim.

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Key milestones

Pioneered the Asia-Pacific's first international class serviced residence property, The Ascott Singapore, in 1984. The Citadines brand also started operations in Europe in the same year with the opening of its first apart'hotel in France, Citadines La Defense.

Expanded global footprint to offer travellers more choices with the full acquisition of Citadines, an established brand of serviced residences in Europe in 2004.

Established the world's first pan-Asian serviced residence real restate investment trust, Ascott Residence Trust, in 2006.

Expanded to the Gulf region and India in 2006.

Expanded presence in Australia with the first Citadines in the country, Citadines Melbourne on Bourke.

Successful privatisation of Ascott in 2008, which aimed to strengthen the company's leadership position and accelerate its growth in key markets by tapping CapitaLand's more established network, real estate development and financial services capabilities.

Ascott transformed a national heritage building into its flagship serviced residence property in Singapore (Ascott Singapore Raffles Place) in 2008.

Ascott launched the Citadines brand in Singapore and Japan in 2009 with the opening of Citadines Singapore Mount Sophia and Citadines Tokyo Shinjuku.

Ascott celebrates 25 successful years as the top international serviced residence owner-operator with special promotions, unprecedented rewards for customers and over 25 community initiatives worldwide.