The Ascott Limited, the service residence arm of CapitaLand, has laid down new plans to expand its portfolio by over 50 percent in the next five years.
Ascott hopes to significantly contribute to the growth of CapitaLand, possibly accounting for as much as 20 percent of the group’s earnings in the future.
Mr. Lim Ming Yan, chief executive of Ascott, announced the plans for “transformational change” in line with the launch of CapitaLand’s newest project, Ascott Huai Hai Road Shanghai. Located near the Xintiandi entertainment district, the 278-unit property is owned by property firm Lai Fung Holdings.
Ascott currently has around 26,000 service residential apartments in its portfolio and aims to increase this figure to 40,000 by 2015.
Mr. Lim is optimistic that the target is achievable given the company’s rate of growth. This year, it will be rolling out around 3,100 apartments, in which 1,600 units in seven properties will be available in the second half. Much of the predicted growth will come from China, where it has recently won contracts to manage four Ascott-branded properties in Hangzhou, Guangzhou, Ningbo and Suzhou.
Ascott believes that Southeast Asia will be its next fastest growing market. In Singapore, occupancy rates of Ascott’s properties exceed 90 percent. The European and Indian market are also in its sights. It could enter Turkey, Switzerland, Italy, as well as countries in Eastern Europe.
Ascott also plans to continue to focus on buying and running properties. It manages and owns approximately 67 percent of its portfolio, and is ready for new investments in major gateway cities, said Mr. Lim.
It could obtain capital from private equity funds, like the Ascott China Fund, or could sell its assets to Ascott Residence Trust for funds to reinvest.
“As Ascott grows, it ‘can and should be a significant part of CapitaLand,” said Mr. Lim. “On average, it has accounted for some 10 percent of the group’s earnings in the last few years, but it would be possible and ‘more meaningful’ to raise this to up to 20 percent.”
Though Mr. Lim did not say how much the portfolio expansion would cost, he noted that Ascott will invest approximately $50 million to refurbish over 10 properties in Asia and Europe, on top of around $20 million it has put in to renovate some properties like Somerset Liang Court.