Ascott’s global gambit

EdgeProp Singapore |

October 11, 2019 8:00 AM SGT

Join our Telegram channel and follow our Facebook for the latest update.

SINGAPORE (EDGEPROP) - Undeterred by market uncertainty, Ascott has been diversifying its offerings and expanding its global footprint, eyeing a worldwide target of 160,000 units by 2023

The two-year restoration of La Clef Champs-Élysées Paris is a careful interpretation of modern Parisian living (Credit: CapitaLand)

First built in 1907 by the Hennessy family of the eponymous cognac, La Clef Champs-Élysées Paris has been restored and repurposed as a 70-room luxury serviced residence. Sharing its 8th arrondissement address with some of Paris’ notable fashion houses, swanky boutiques and restaurants, it is the third property under The Crest Collection. The portfolio features a selection of CapitaLand’s wholly-owned lodging business unit, The Ascott Ltd’s most prestigious and unique luxury serviced residences.

For La Clef Champs-Élysées Paris, Ascott appointed renowned French interior designer JeanPhilippe Nuel. He is known for the revamp of the Piscine Molitor, an iconic Art Deco swimming pool that was classified as a national heritage site in 1990.

The two-year restoration of La Clef Champs-Élysées Paris is a careful interpretation of modern Parisian living. The fireplace in the rooms, and the detailing on the iron handrail along the spiral staircase that winds down all five floors, too, were carefully restored. Various cornices and corbel structures also maintained their original design. Adding to this, the interiors were given a modern revamp with marble and polished brass.

While La Clef Champs-Élysées Paris mainly caters to leisure and corporate travellers, its well-conserved setting has made it a choice location for wedding proposals. In particular, the property’s two “Duplex Montmartre – Terrace” has witnessed two offers of marriages. Occupying the highest floor of the five-storey Haussmannian-like building, the exclusive 603 sq ft apartment opens out to a balcony overlooking the fashion capital’s skyline, with the Basilica of the Sacré-Cœur rearing its white dome in the vista.

The interiors were given a modern revamp with marble and polished brass (Credit: CapitaLand)

Unique experience

Besides La Clef Champs-Élysées Paris, Ascott is set to offer a similar heritage conservation in the UK under its Citadines brand, which will open in November.

Citadines Islington London will be part of Islington Square, an integrated development nestled within a former Royal Mail sorting office, which was built in 1907. Close to Upper Street, the serviced residence is surrounded by an eclectic mix of quirky boutiques, bars and restaurants. Alluding to the neighbourhood’s charm, the walls of the reception lounge are dressed in hues of dark pastel, with mismatched furniture adding a vibrant touch of colours.

Ascott owns both assets through its 50:50 private equity fund with Qatar Investment Authority – the Ascott Serviced Residence Global Fund (ASRGF). The inclusion of restored heritage buildings in its portfolio helps Ascott to address the shift to experiential consumption in the lodging business. “When we chose [La Clef Champs-Élysées Paris], its historical value was precious to us,” says Kevin Goh, CEO of The Ascott Ltd.

In a way, restoring heritage buildings has landed Ascott a winning formula in devising unique experiences for its guests. While La Clef Champs-Élysées Paris only started to host guests in February, it has achieved occupancy of above 80% and close to 100% during peak periods. Around 90% of its patrons are leisure and corporate guests who are on short stays of less than a month, while the remaining 10% or so comprises business travellers who stay for more than a month.

La Clef Champs-Élysées Paris has clinched the title for Europe’s Leading Serviced Apartments 2019 at the World Travel Awards held in Madeira, Portugal, an annual event recognising excellence in global travel and tourism as voted by industry professionals and travellers.

The fireplace in the rooms were restored, taking after the original design (Credit: CapitaLand)

Defensive strategy

Within the EU where Brexit looms, Ascott is taking a long-term view on the unpredictability vis-à-vis its business strategy.

Lee Ngor Houai, managing director for Europe at The Ascott Ltd, tells the media that the group has to sift through a flurry of differing opinions on Brexit. “I’ve been in different seminars talking about Brexit, and what is very interesting is that when the question is regarding investments, half of the room will say, ‘We have to hold’, and half of the room will say, ‘We have to go’,” he shares. “So the point is how we look at it.”

The way he sees it, Ascott will not waver in the face of uncertainty. “We are talking probably about five, six years from the moment you acquire, renovate, redevelop and stabilise your performance,” he explains. “By then, situations should have recovered.”

Meanwhile, Goh observes that there is also an upside arising from the uncertainty brought about by Brexit. “The pound has become cheaper, and we are seeing a lot more leisure travel going into the UK,” he says. “In that sense, we are the beneficiary of that.”

He cautions that this could be a double-edged sword as goods could become more costly. At the same time, there could be a disruption in labour flow between the EU and the UK. Over the two years since the Brexit referendum, Ascott has been ramping up its efforts to attract and retain its staff.

Citadines Islington London will be part of Islington Square, an integrated development nestled within a former Royal Mail sorting office, which was built in 1907 (Credit: CapitaLand)

In a worst-case scenario of a no-deal Brexit by Oct 31, Ascott’s diversified portfolio across Europe and other global regions would help mitigate risks. Under Ascott Residence Trust (Ascott Reit), 26.5% of its assets are in Europe: 9.7% of assets are in France, 9.5% in the UK, 4.7% in Germany, and 1.3% each in Spain and Belgium. More than half of Ascott’s Europe portfolio is in France due to its acquisition of the Citadines brand in 2002. The brand has now expanded to Asia, and remains Ascott’s fasting-growing brand in the region.

Elsewhere, 57% of Ascott’s assets are in te Asia-Pacific, with Singapore at 15.8%, followed by Japan at 13% and China at 10%. Assets in the US make up 16.7% of its portfolio. As at June 30, Ascott Residence Trust’s total assets are valued at $5.49 billion.

Ascott owns La Clef Champs-Élysées Paris through its 50:50 private equity fund with Qatar Investment Authority (Credit: CapitaLand)

Room for expansion

Despite macroeconomic uncertainty, Ascott is not curtailing its expansion plans. At the grand opening of La Clef Champs-Élysées Paris, Ascott announced that it had acquired a $192 million freehold serviced residence in the North Sydney CBD through ASRGF. To be named Citadines Walker North Sydney, the serviced residence is part of a 48-storey integrated development that also has office and retail components. It will be the tallest tower in North Sydney when completed in 2021.

In addition, Ascott announced that it has signed 13 other properties under franchise and management contracts. The properties are located across China, France, Indonesia, Kenya, and Vietnam. Including its latest acquisition in Australia, the 14 new properties offer more than 2,200 units.

In the year to date, Ascott has secured a total of over 10,600 units – double the number of units signed organically for the same period last year. Its portfolio has hit a total of more than 112,000 units – consisting of more than 66,000 operating units and close to 46,000 units under development – in over 700 properties. The group has a total asset value of $10 billion and remains on track to meet its global target of 160,000 units by 2023.

On June 30, Ascott’s parent company CapitaLand announced that it had completed its $11 billion acquisition of Ascendas-Singbridge, creating one of Asia’s largest diversified real estate groups with over $123 billion of assets under management.

Operating as a single entity from July 1, CapitaLand has proposed a $1.2 billion merger between Ascott Residence Trust and Ascendas Hospitality Trust.

“The recent proposed combination of our two hospitality trusts, Ascott Residence Trust and Ascendas Hospitality Trust, will cement Ascott Residence Trust’s position as the largest hospitality trust in the Asia-Pacific,” Goh says. “With Ascott’s sponsored stake in the trust, we will continue to benefit from the properties’ steady yield and participate in their future growth.” The combined trusts will have an asset value of $7.6 billion.

Spanning nine storeys (levels 4 to 12 of Funan mall), lyf houses 279 apartments with 412 rooms, and links guests to City Hall MRT Station via a sheltered underground walkway (Credit: CapitaLand)

New segments

Apart from expanding its global footprint, Ascott has also been targeting new demographics. Last month, it unveiled its venture into the co-living segment with lyf Funan. Designed with millennials in mind, lyf Funan is located in the newly re-opened Funan mall at Hill Street, occupying over 121,000 sq ft of gross floor area. Ascott has described lyf as Southeast Asia’s “largest co-living property”. Spanning nine storeys (levels 4 to 12 of Funan mall), it houses 279 apartments with 412 rooms, and links guests to City Hall MRT Station via a sheltered underground walkway.

Guests who stay at lyf can settle for a single night’s sleep, unlike other co-living spaces which typically require a stay of at least three consecutive months – in line with the URA’s regulations for short-term rentals. Due to this flexibility, lyf can cater to tourists and short- and long-term corporate travellers.

Aside from targeting the younger demographic, Ascott is also looking at the silver generation. Among the 14 new properties signed last month, four of these are franchise agreements inked with Aegide Domitys, a provider of serviced accommodation for independent seniors in France.

Citadines Connect City Centre Roanne is the first property in Europe under Ascott’s Citadines Connect brand of business hotels. Another two properties, Hôtel Château Belmont Tours and La Clef Golfe-Juan, will also be part of The Crest Collection, and the fourth property is Citadines Toulouse. These four properties in France represent Ascott’s foray into three new cities – GolfeJuan, Tours, and Roanne – and will open from 2020 to 2023.

The four Ascott-branded accomodation will each be located near a senior living complex and served by facilities, some of which include eateries, spas, pools and fitness centres. The respective localities would also have easy access to healthcare amenities, according to Frederic Walther, managing director of Aegide Domitys.

lyf Funan is located in the newly re-opened Funan mall at Hill Road, occupying over 121,000 sq ft of gross floor area (Credit: CapitaLand)

Ascott’s intention to co-locate its brand near senior living facilities is a trial run to test out the elder-stay segment. “I think [independent] senior living is something that we can explore,” says Goh. “It’s an extension that we can look into [with Domitys] and work on harder together.”

Now 20 years old, Domitys runs 100 of such senior living complexes in France. The elderly are served at all hours by staff specialised in senior care. Dedicated programmes for the seniors are also arranged, including trips to the movies. In Domitys properties, the length of stay ranges between six and seven years, with a turnover rate of 15% to 18% a year.

“We always take care of their security. When you are 85... you still want to do things, but you feel a little fragile and so you need someone to hold your hand. It’s what we are doing,” Walther explains.

From creating unique experiences with carefully restored heritage properties to expanding its global footprint and reaching new demographics, Ascott has most market segments covered. And yet, Ascott remains grounded.“I think we are just at the beginning of this journey,” says Goh.

Read also: