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Frasers Hospitality buys property in Dalian
FRASERS Hospitality, the hospitality arm of mainboard-listed Frasers Centrepoint Limited (FCL), has acquired a serviced residence in Dalian city in Northeast China for 481.37 million yuan (S$100.29 million), as part of plans to double its presence in China.
This newly acquired property, to be converted into 259-unit Fraser Suites Dalian, is one of the 16 new properties that Frasers Hospitality will be adding in China, including those in the pipeline.
It is part of the mixed-use Europark Tower development comprising a 100,000 sqm lifestyle shopping mall, offices and luxury residential apartments located in the heart of Donggang CBD within walking distance to Dalian Port and Davos Conference Centre. Fraser Suites Dalian is scheduled to open in 2017.
The latest acquisition brings its portfolio in China to 30 properties with over 7,000 keys by 2019.
Currently, Frasers Hospitality is present in both established and emerging cities, with operational serviced residences in Beijing, Chengdu, Guangzhou, Nanjing, Shanghai, Shenzhen, Suzhou, Tianjin, Wuxi and Wuhan.
Frasers Hospitality chief executive Choe Peng Sum told BT that the company has been strengthening its presence in the second-tier cities since valuations in the first-tier cities have skyrocketed.
As the Chinese government moves some second-tier cities into the so-called "1.5-tier cities", these cities have been growing at breakneck speed with average daily rates in some cases as high as in the first-tier cities, hence justifying the investment yields, Mr Choe said.
The newly acquired Dalian property offers an internal rate of return "north of 8 per cent", he added. "Investing in Dalian, one of the country's top 10 fastest growing cities is our investment in the future of China."
The 16 new properties that Frasers Hospitality is adding in China will place it strategically in the country's most thriving cities, Mr Choe said. These will be located in Changsha, Dalian, Hefei, Nanchang, Shenzhen, Suzhou, Tianjin, Wuxi, Xiamen, Chengdu and Shanghai.
Frasers Hospitality is still open to the first-tier city of Guangzhou, where opportunities are emerging as the city expands its Central Business District. "There are some land we are looking at right now," Mr Choe said.
While recognising the disruptive nature of online apartment-sharing platforms in the likes of Tujia.com, Mr Choe said Frasers Hospitality is looking to work with some of them.
But for now, about 90 per cent of its clientele are still multinational companies and corporate travellers who work with online travel agents like Booking.com, Agoda and Expedia. In China, Frasers Hospitality is working closely with Ctrip International and eLong.
Globally, Frasers Hospitality is still aiming to reach 30,000 keys by 2018-19, from more than 21,000 keys currently.