Amara takes on Shanghai

/ EdgeProp Singapore
February 17, 2018 8:24 AM SGT

Albert Teo, CEO of the Singapore-listed hospitality, property investment and development group, says the group is nimble and continues to look beyond Singapore

On a recent afternoon, hotel staff at Amara Singapore laid out a full afternoon tea spread for Albert Teo, CEO of Amara Holdings, a Singapore-listed hotel and property investment group. Teo allowed himself just two hard boiled eggs. It is part of his recent health regimen, which includes a high-protein diet and weightlifting for strength training.
Teo’s interest in health and wellness has allowed him to tap a burgeoning business: catering to millennials who are preoccupied with looking and feeling good. Amara’s latest hotel, the 343-room luxury Amara Signature Shanghai, will have a wellness focus — with a state-ofthe- art gym, complete with the latest gym equipment and personal trainers, as well as customised wellness programmes designed by the operator of the Amara Sanctuary Resort Sentosa.
Teo: This is an important milestone for Amara Holdings as we continue to look for opportunities to expand outside of Singapore (Credit: Samuel Isaac Chua/EdgeProp Singapore)
“It’s going to be very niche, with a holistic programme that focuses not just on your physical wellness but also on your health, and that includes your diet,” says Teo. To enhance the atmosphere of a private members’ club catering for the affluent in Shanghai, the hotel offers facilities such as a cigar room and whiskey lounge.

Catering for millennials

In line with its focus on catering for millennials, Amara signed on co-working operator and incubator Kr Space, which will be the anchor tenant at the office block of 100 AM Shanghai. Kr Space is taking up 4,000 sq m of floor space on a 10-year lease. The Beijing-headquartered Kr Space is a spin-off from from Ant Financial- backed technology platform 36Kr.
Kr Space is expected to commence operations at 100 AM Shanghai in 3Q2018. “Since the property in Shanghai is new, we have to put in the right tenant mix, as we want to build a community of hotel guests and local residents,” says Teo.
Developed by Amara, 100 AM Shanghai is a mixed-use commercial complex adjacent to Amara Signature Shanghai. Besides the office block, the 10,500 sq m (113,022 sq ft) project will have a retail podium with curated restaurants and a cinema. It is scheduled to soft-open in 3Q2018.
Meanwhile, about 102 rooms at Amara Signature Shanghai opened on Feb 5, with the remaining rooms to open progressively by 2Q2018.
The 30-storey Amara Signature Shanghai is located at the corner of Changshou Road and Inner Jiaozhou Road in Puxi, near the Changshou Road metro station for lines 7 and 13 (Credit: Amara Holdings)

Competition in luxury hotel segment

With a buoyant tourism industry, the average daily rate of five-star hotels in Shanghai was RMB962 ($206), with average occupancy rates at 70.1% in 1H2017, according to Knight Frank’s Greater China hotel report 2017. The supply of luxury hotels in Shanghai is expected to peak, however, with a total of 13 new luxury hotels offering more than 2,800 rooms scheduled to open this year. They include the 200-room Bellagio by MGM Shanghai, the 370-room Songjiang Quarry Hotel built in an abandoned quarry, the 300-room land mark Rocco Forte Hotel on the riverside and the Jianyeli Capella Hotel in Shanghai’s Shikumen-style villas and residences.
“Intense competition is inevitable, owing to the huge amount of new supply,” says David Ji, Knight Frank director and head of research and consultancy, Greater China. “Avoiding homogenisation has become a critical issue for both veteran and new operators.”
This point is not lost on Amara’s Teo, even though the Amara Signature Shanghai may be the only luxury hotel on Changshou Road. Located at the junction of Changshou Road and inner Jiaozhou Road in Puxi, it is near the Changshou Road metro station for lines 7 and 13. It is just a 10-minute drive to the Jing’An business and shopping district.
The lobby of the five-star Amara Signature Shanghai (Credit: Amara Holdings)

Two decades in the making

Standing at 30 storeys and sheathed in blue glass, the Amara Signature Shanghai marks Amara’s first venture into the luxury hotel segment. It was 22 years in the making, as Amara had purchased the site from the Shanghai Municipal Planning, Land and Resources Administration in 1996, according to Phillip Capital in a June 2013 report. The site comes with a 40-year lease that expires in 2037.
Amara had purchased two adjacent sites at 582 and 600 Changshou Road, which were then amalgamated, says Teo. One of the sites was previously occupied by a cinema. Amara was asked to retain its use as a cinema as part of the new development. “It will be a premium cineplex,” he adds. Three cinema operators have been shortlisted.
“After years of conceptualising and execution, we are excited to unveil our first luxury hotel brand, Amara Signature Shanghai, in the global city and top global financial centre — Shanghai,” says Teo in a statement. “This is an important milestone for Amara Holdings as we continue to look for opportunities to expand outside of Singapore.”
This marks Amara’s second overseas property. Its first — the 250-room Amara Bangkok — opened in 2015. In the first nine months of 2017, the Amara Bangkok had an occupancy rate of 87.6%, up from 80.2% in the previous year.
In 2007, it opened its second hotel property in Singapore — the 140- room Amara Sanctuary Resort Sentosa. Its flagship, 392-room Amara Singapore was opened 32 years ago in Tanjong Pagar. The property sits on a 99-year lease from 1979. Hotel supply in Singapore to taper off Amara Singapore’s occupancy rate hovered around 90% last year. “We have been upgrading and trying to make this property a lot more interesting by giving our guests an integrated lifestyle experience,” says Teo.
The 32-year-old Amara Singapore and the adjacent 100 AM in Tanjong Pagar in the CBD (Credit: Samuel Isaac Chua/EdgeProp Singapore)
In Singapore, new hotel supply is expected to taper off after 2017. Hotels opening this year include the Six Senses Duxton, Six Senses Maxwell, Holiday Inn Express Serangoon Singapore and Laguna Dusit Thani, with a total of more than over 1,000 rooms, says CBRE in its Singapore Market Report 2H2017. Hotel openings next year include the 130-room YOTEL Changi Airport and three hotels in Sentosa by Far East Hospitality, which will add 839 rooms to new supply.
Robert McIntosh, executive director of CBRE Hotels Asia Pacific, says: “Although some downward pressure on occupancy levels might be felt in the short term, the slowdown in new supply will help rebalance existing hotel performance in the next three to five years as the hotel industry seeks to further consolidate and grow its occupancy in the light of strong arrival numbers.”
On Feb 12, the Singapore Tourism Board said visitor arrivals in 2017 rose 6.2% y-o-y to 17.4 million, with tourism receipts up 3.9% y-o-y to $26.8 billion. Both were record highs. STB’s forecast for this year is 18.1 million in visitor arrivals and tourism receipts of $27.1 billion to $27.6 billion.

‘Japan-centric’ 100 AM

Adjacent to Amara Singapore, the former four-storey Amara Shopping Centre underwent a revamp and reopened as 100 AM in 2011. Since then, the group has continued to actively manage the tenant mix to enhance the asset.
Amara Shopping Centre was revamped and reopened as 100 AM in 2011 (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Popular Japanese value chain store Daiso is taking up 4,800 sq ft at Level 4 of 100 AM, and popular Japanese grocer Don Don Donki (known as Don Quijote in Japan) will be opening there in June and occupy 19,000 sq ft on Levels 2 and 3. “Previously, the space was taken up by many small shops,” says Teo. “It makes more sense to amalgamate the space.”
It complements the offerings on Level 3 of 100 AM, which features Itadakimasu by PARCO. “The word ‘Itadakimasu’ is Japanese slang for ‘bon appetit’,” says Teo. The space is occupied by seven Japanese restaurants serving a wide range of midpriced meals from sushi to soba, ramen and katsudon.
Teo says 100 AM has become “Japan-centric” and that move was intentional. “We can’t be a shopping centre for everyone, given the size of our mall,” he explains. “So, it’s better to have a focus to optimise our business.”
The Japan-centric 100 AM in Singapore will see Japanese grocer Don Don Donki join value retailer Daiso and Itakadimasu by Parco, which features seven Japanese restaurants (Credit: Amara Holdings)

Development margins still ‘in single-digits’

Besides hospitality and property investment, Amara undertakes residential development as well. Past projects include the 514-unit executive condo CityLife@Tampines developed as part of a consortium; boutique developments in the prime districts such as Killiney 118 and The Abode@Devonshire; as well as two pairs of 2½-storey, semi-detached houses on Hythe Road in Serangoon Gardens. Its maiden residential development was the 221-unit The Linear at Bukit Panjang.
“Of course, we are continuing to look for development sites — both government land sales and en bloc sites,” says Teo. “The property market euphoria has started, and bids are bullish.”
For now, Amara still has about 100 units in its inventory: the newly completed boutique development M5 on Jalan Mutiara, with 33 units, of which seven have been sold; and the 56-unit Muse at Newton. Both are freehold developments and likely to be launched in 3Q2018.
The newly completed M5 boutique condo on Jalan Mutiara in the prime River Valley area (Credit: Samuel Isaac Chua/EdgeProp Singapore)
With property development margins in Singapore “still in the single- digits”, Teo believes Amara should also look at opportunities in other markets in the Asean region, where capital investment may be lower, but yields are higher.
“We have recurring income from our hotels and mixed developments,” says Teo. “I can deploy the funds either in Singapore or elsewhere for long-term investment.”