Ascott sees 40% rise in units on Vietnam boost

It marks firm's fourth straight year of record unit growth

The Ascott's Somerset Feliz serviced apartments in Ho Chi Minh City. Ascott's unit growth up to this month was boosted by record signings in Vietnam, with a total of 2,800 new units signed, exceeding its full-year signings in the country in previous
The Ascott's Somerset Feliz serviced apartments in Ho Chi Minh City. Ascott's unit growth up to this month was boosted by record signings in Vietnam, with a total of 2,800 new units signed, exceeding its full-year signings in the country in previous years.PHOTO: THE ASCOTT

The Ascott has secured over 8,300 units across more than 30 properties in the first seven months of this year, marking a 40 per cent growth compared with the same period a year ago, the company announced in a regulatory filing yesterday.

With the latest figures in unit growth, the wholly owned lodging business unit of CapitaLand has achieved its fourth consecutive year of record unit growth despite the Covid-19 pandemic, and delivered about 20 per cent compound annual growth rate since 2017.

Fee income for the company is expected to increase as the planned units turn operational. Some $20 million to $25 million in fees is expected to be earned for every 10,000 stabilised serviced residence units.

The company's continued unit growth also puts it on track to achieve its target of 160,000 units by 2023, from the more than 128,000 units that it has globally to date.

Unit growth up to this month was boosted by record signings in Vietnam, with a total of 2,800 new units signed, exceeding its full-year signings in the country in previous years.

Among the new units signed, 1,900 units belong to the largest serviced residence development in the country. It is expected to open in phases from next year.

Ascott also signed more than 2,900 units across 12 properties in China, covering cities such as Hefei, Ningbo, Shanghai, Shenyang, Shenzhen, Wuhan and Xian.

Ascott will also continue expanding its global portfolio with its first signing in Senegal, together with new developments in Australia, Cambodia, France, Indonesia, Malaysia and Morocco, that are slated to open between next year and 2027.

CapitaLand's chief executive for lodging Kevin Goh said the lodging management business remains an important component of CapitaLand's investment management strategy.

"The newly secured properties will increase Ascott's recurring fee income as they open and stabilise, adding on to the over $195 million in fee income contributed by our operational units in 2020," he said.

Mr Goh also said the company has increased its fee-related earnings and expanded its funds under management to $8 billion to date through a private fund and its sponsored Ascott Residence Trust.

Furthermore, Ascott saw strong recovery in demand for its serviced residences in China. Revenue per available unit of operating properties rose over the same period in 2019 by 1 per cent and last year by 35 per cent, with total revenue increasing by 6 per cent and 38 per cent respectively.

Over China's five-day "Mini Golden Week" public holiday, Ascott also achieved 100 per cent occupancy across over 20 properties in more than 15 cities.

With the 12 newly secured properties set to open between next year and 2026, Ascott's portfolio in China will grow to more than 34,600 units in over 170 properties spread across 40 cities, the company said.

Shares of CapitaLand gained 12 cents, or 3.1 per cent, to close at $4 yesterday.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on July 22, 2021, with the headline 'Ascott sees 40% rise in units on Vietnam boost'. Subscribe