Ascott forms strategic alliance with China's largest construction firm to fast-track growth

Facade of the serviced residence at Ascott Heng Shan Shanghai.
Facade of the serviced residence at Ascott Heng Shan Shanghai. PHOTO: THE ASCOTT LIMITED

SINGAPORE - Singapore-listed CapitaLand's wholly-owned serviced residence business unit, The Ascott Limited, aims to fast-track its expansion into the China market by forging a strategic alliance with the country's biggest construction firm.

Ascott said that through its alliance with Dongfu Investment Development Corporation - a subsidiary of China State Construction Engineering Company (CSCEC) - it will have first right to manage apartments currently under development as well as future projects to be built by Dongfu Investment.

Both parties will draw on each other's capabilities, resources, brands and sales network to expand in China.

Dongfu Investment's parent company, CSCEC, is ranked 37 amongst Fortune's global 500 companies with massive projects from Singapore to United Arab Emirates and South America, said Ascott.

Its partnership with Dongfu Investment follows its recent alliances with Alibaba's online travel site Alitrip and Tujia.com International, China's largest online apartment sharing platform equivalent to Airbnb, as well as major developers such as Vanke and Yuexiu.

Said Mr Lee Chee Koon, Ascott's chief executive officer: "These partnerships will allow Ascott to deepen our presence and build scale in key cities; expand our network to new gateway cities; broaden our reach to even more travellers as well as create new seamless O2O (Offline-to-Online and Online-to-Offline) experiences for our guests."

Ascott and Dongfu Investment kicked off its alliance with a management contract for the 148-unit Citadines Guoxitai Xi'an which is slated to open in 2018.

Said Mr Kevin Goh, Ascott's managing director for North Asia: "China is Ascott's largest market with the most number of properties. We have recorded three consecutive years of expansive growth in the country with more than 2,000 units added year on year. In 2015, we secured over 2,500 units across 14 new properties in China. We are positive that demand for quality serviced residences will continue to grow in China, riding on the increasing domestic travel especially in the first and second tier cities."

Mr Goh added: "Through our alliance with Dongfu Investment, we will be looking at expanding in cities such as Shanghai and Jinan, tapping on our partner's major commercial building projects across these cities. Our latest partnership with Dongfu Investment will widen Ascott's lead as we advance towards our target of 20,000 units in China by 2020.¡¨

Citadines Guoxitai Xi'an is close to Xi'an's Hi-Tech Industries Development Zone where 1,000 multinational corporations including 40 Fortune 500 companies such as Samsung, Micron, Infineon and NEC are based. The serviced residence is a 10-minute drive to the city centre.