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Foreign property firm expands PH presence

Published on Friday, 16 August 2013 00:00
Written by IRMA ISIP
Malaya Business News Online - Philippine Business News | Online News Philippines
The company manages the 306-unit Ascott Makati,(photo) the 151-unit Somerset Millennium Makati, and the 147-unit Somerset Olympia Makati.
Ascott Limited is planning to manage two more serviced apartments to achieve its goal of 10 properties in the Philippines by 2015.
Arthur Gindap, Ascott’s regional general manager for the Philippines and Thailand, said in an interview the company is looking for more properties in Metro Manila and in the provinces where it can operate either  of its three brands of serviced apartments, Ascott, Somerset or Citadines.
The company now manages four properties but only three are operating: the 306-unit Ascott Makati, the 151-unit Somerset Millennium Makati, and the 147-unit Somerset Olympia Makati. The fourth is Somerset Salcedo.
Gindap said Ascott Ltd. is poised to open four more: Ascott Bonifacio Global City Manila (220 rooms) and Citadines Salcedo Makati (215 rooms) in 2014, Citadines Millennium Ortigas (210 rooms in 2015, and Somerset Alabang Manila (150 rooms)  in 2017.
In 2012, Ascott’s three operating properties recorded a total of P1.24 billion worth of annual revenues, as well as P758.8 million in profit.
“These figures drive us towards maintaining a bullish stand on the market as we push for more expansions within and outside of Metro Manila. We are bullish that the market for extended stay travelers would continue to grow,” Gindap said.
He said Ascott, being not a first-mover, is closely watching ongoing developments particularly in the central business districts in Quezon City, Mall of Asia area, Roxas Boulevard, Cebu and Davao for future property management of either of its three brands.

“We are closely watching the secondary cities,” Gindap said.

While the Ascott The Residence brand is very exclusive, catering to chief executive officers, Somerset Serviced Residence is more balanced for larger families while Citadines Apart-Hotel caters to single travelers.
Gindap said Ascott Ltd. is bullish of the Philippines that it is opening up two Ascott developments.
Ascott normally allots just one per country. It is also going to open the first Citadines, the one in Salcedo.
Even its Ascott Makati, the former Oakwood Premier, is undergoing renovation by splitting some of the two-bedroom units into separate studios where demand is greater.
“Currently, we have an inventory of over 600 units, making us the largest international serviced residence operator in the country. With our four upcoming properties, we will more than double this figure in the next four years.”
He said the size of the foreign direct investments in a country is directly related to the occupancy rate of a serviced apartment.
In its three operating properties, occupancy rate is about mid to high 80s. Guests stay an average of six months but some book for as long as one year, particularly for those staying in the Somerset properties, and as short as one to three months for Ascott Makati guests.
“We cannot compete with condominiums and residences in Dasmarinas or Forbes Park in terms of price,” said Gindap.
Ascott Makati was the rebranded Oakwood, site of the infamous mutiny, and the building was acquired by Ascott Ltd for P2.7 billion in 2007.
The land is covered by a long-term lease with Ayala Land.
 The value of that property now is considerably high, said Gindap, but declined to elaborate.
Except for Ascott Makati, the three other properties are now under Ascott Ltd.’s real estate trust investment (REIT) unit, Ascott Properties Trust.
Gindap said owners/developers of upcoming properties have the option to sell the assets to Ascott Ltd. after “hitting a certain yield” after three to five years.
“Ascott does not develop properties but we have management agreements with these properties. We prefer greenfield developments where we can custom-build the projects based on Ascott specifications. We are open to brownfields, such as abandoned buildings,” Gindap said.
According to Gindap, industry-wide, serviced apartments are most profitable generating as much as 60 percent in operating profit compared to 35 to 40 percent in hotels. Luxury hotels have even lower operating profits of as low as 25 percent.
Hotels’ operating expenses are high due to the food and beverage operations. Serviced apartments have very limited F&B since they derive up to 95 percent of their revenues from rooms.
The Ascott brand caters primarily to guests staying for one week to one year or even longer, ensuring a more stable occupancy compared to hotels.  These are business executives on extended business trip, project assignment or overseas posting who require the comfort and convenience of hotels and seek the space and homely comforts of a private residence.
“At our serviced residences, guests can choose to stay in a studio or one- to three-bedroom apartments.  They can enjoy the space and privacy of a well-appointed apartment that features a well-equipped kitchen and separate living and dining area,” Gindap said.
“In 2014, we will be opening our first Citadines-branded property in the Philippines.  With all our three serviced residence brands present in the country, we are better poised to cater to guests’ unique stay preferences and requirements,” Gindap said
With its expansion and its own brand of hospitality, Ascott in the Philippines is fuelling growth and recognition for serviced residence category in the local hospitality landscape.
The Ascott Ltd. is a Singapore company that has grown to be the world’s largest international serviced residence owner-operator. It has more than 22,000 operating serviced residence units in key cities of Asia Pacific, Europe and the Gulf region, as well as over 8,000 units which are under development, making a total of more than 31,000 units in over 200 properties.
Its portfolio spans over 70 cities across more than 20 countries, 14 of which are new cities in Ascott’s portfolio where its serviced residences are being developed.
Ascott, a wholly-owned subsidiary of CapitaLand Limited, pioneered Asia Pacific’s first international-class serviced residence with the opening of The Ascott Singapore in 1984.
CapitaLand is one of Asia’s largest real estate companies.
Headquartered and listed in Singapore, the company’s businesses in real estate and real estate fund management are focused on its core markets of Singapore and China.
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