Frasers Hospitality accelerates growth via asset recycling and management contracts
By Timothy Tay
/ EdgeProp Singapore |
Eu: I think it is timely for us to sharpen the focus of all our hospitality brands. (Picture: Samuel Isaac Chua/The Edge Singapore)
This year, Frasers Hospitality, the hospitality and lodging business unit of Frasers Property, shed some of its Singapore assets even as it expanded its footprint abroad. “The company is always eyeing timely opportunities to recycle and redeploy capital as part of our international expansion strategy in the coming years,” says Eu Chin Fen, CEO of Frasers Hospitality since January 2023. Prior to that, she was the CEO of Frasers Hospitality Trust’s (FHT) manager since its listing in 2014.
In early September, a consortium led by Hong Kong-based family office Atelier Capital Partners acquired the 313-key Capri by Fraser, Changi City hotel for $170 million. The price translates to $543,131 per key.
The hotel has since been rebranded Dorsett Changi City Singapore, with Dorsett Hospitality International (DHI) as the operator. DHI is a subsidiary of Hong Kong-listed Far East Consortium International, one of the shareholders in the consortium, along with Singapore-listed Heeton Holdings and Singapore family office Fortez Capital.
Frasers Property sold the 313-key hotel Capri by Fraser, Changi City for $170 million, or about $543,131 per key. (Picture: Samuel Isaac Chua/The Edge Singapore)
The hotel had opened as a Capri in 2012 and was sold to Frasers Property in 2014 for $203.4 million. It is part of a mixed-use development that includes Changi City Point shopping mall. The property sits on a 60-year lease awarded by JTC. It has a remaining lease of 45 years.
In March this year, FHT, which had the right of first refusal, turned down an offer from its sponsor, Frasers Property to purchase the property. Frasers Property therefore sold the asset to a third party.
‘Recycle capital’
“Real estate is a cyclical business, and as a portfolio manager, it is essential for us to recognise which of our properties have reached the end of their capital cycle and to identify opportunities where we can recycle that capital into other opportunities,” says Eu.
Fraser Residence River Promenade was sold to Singapore-listed Tuan Sing Holdings for $140.889 million in May. With 72 serviced apartments, the price translated to $1.96 million per key. The serviced apartments on Jiak Kim Street opened in September 2023t. They are housed in a newly-built four-storey block that is part of a mixed-use development that includes Frasers Property’s 455-unit luxury condo Rivière, which was completed last year and fully sold.
Formed 26 years ago, Frasers Hospitality manages over 16,000 serviced apartments and hotel rooms across 20 countries. Frasers Hospitality owns and operates six different hospitality brands, ranging from its namesake Fraser Suites, Fraser Residence, and Fraser Place to Capri by Fraser, Modena by Fraser, and its luxury brand Malmaison, which it acquired in 2015.
“We are well-known internationally as a premium serviced apartment operator,” says Eu. “Fundamentally, we have demonstrated that we can deliver value to the assets we manage.”
Given the challenging global environment and rising operational cost, Frasers Hospitality is widening its footprint in existing markets through partnerships with established local players to grow its revenue contribution from management contracts, she adds.
New management contracts
In 1H2024, the group opened three new properties in Bahrain, Chengdu and Shanghai. An additional nine properties are scheduled to open in the next two years across China and Vietnam.
Eight new management contracts have been announced this year. Of the eight, three are in Shanghai: the 210-key Fraser Place Wujiaochang Shanghai, which opened in June; the 307-key Modena by Fraser Wujiaochang, which is slated to open next year; and the 205-key Fraser Place Pudong Shanghai, which is set to open in 2027.
The 210-key Fraser Place Wujiaochang Shanghai is one of eight new properties so far this year that is managed by Frasers Hospitality. (Picture: Frasers Hospitality)
Frasers Hospitality also partnered with Chinese developer Poly (Sichuan) Investment and Development Co to launch its first Fraser Place-branded project in Chengdu, China. The 238-key Fraser Place Chengdu opened its doors in March, offering a mix of studios to three-bedroom serviced apartments.
In Bangkok, Thailand, Frasers Hospitality will be opening two new properties: the 261-key Fraser Suites Bangkok in 2026, and the 210-key white-label serviced apartments. Both properties are within the new US$3.9 billion ($5 billion) mixed-use development One Bangkok, which is developed by TCC Assets, a subsidiary of Thai conglomerate TCC Group. Incidentally, Singapore-listed Frasers Property is also a member of TCC Group.
“Our management business is very scalable, and the management fees continue to contribute significantly to our overall annual revenue,” says Eu.
20 properties over next four years
Over the next four years, the group intends to open another 20 properties, including the nine properties scheduled to open over the next two years.
While the hospitality group will likely stick to established markets and gateway cities, it is eyeing opportunities in emerging markets such as Indonesia, Cambodia, Vietnam, Malaysia, and the Middle East.
For instance, in February, Frasers Hospitality opened its third property in Bahrain, the 63-key Fraser Suites Al Liwan Bahrain. The new serviced apartments are part of a mixed-use project with residences, commercial, hospitality, and entertainment components developed by Bahrain-based real estate developer Seef Properties.
The 238-key Fraser Place Chengdu is the first Fraser Place-branded project in Chengdu, China. (Picture: Frasers Hospitality)
“Within the Middle East region, we see many opportunities for Frasers Hospitality to work closely with local partners to help manage and grow their portfolio of long-stay lodging assets,” says Eu.
Beyond the signature brands of Frasers Suites and Fraser Residence, she sees an opportunity to plant other flags under the group’s umbrella in the Middle East, such as Capri. Demand for lodgings in the Middle East generally stems from project teams going there to work on one- to two-month stints, as well as professionals who visit the Middle East regularly, such as consultants. Hence, she sees potential for the group’s serviced apartment business.
New markets, long-stay accommodation
Frasers Hospitality is optimistic about the long-stay accommodation segment, given the challenges in the residential rental market across many major cities, with demand far outstripping supply. “Our capital partners are also keen on investing in premium accommodation assets,” says Eu.
In 2027, Frasers Hospitality will open its first premium serviced apartment in Taipei, Taiwan. It is opening Frasers Residences Taipei, with 200 serviced suites, in prime Beitou district. The property is developed in partnership with Taiwanese real estate developer Hung Tai Group. Frasers Hospitality will manage the serviced residences when completed.
A year ago, in May 2023, Frasers Hospitality tied up with US real estate group Tishman Speyer and Asian real estate investment firm Alyssa Partners in China and Japan, respectively. The deals involved a 325-unit development in Shenzhen and a 124-unit development in Osaka, giving Frasers Hospitality a portfolio of 449 rental housing units in Asia’s two largest economies. The combined acquisition cost is $170 million.
Frasers Hospitality partnered with Hung Tai Group to operate Frasers Residence Taipei, its first foray into the Taiwanese market. (Picture: Frasers Hospitality)
Frasers Hospitality is also partnering with Yotel to launch the brand’s first Yotel property in Japan in early 2025. The site was acquired and developed by Frasers Hospitality and is within walking distance of Tokyo Station, with dining, shopping and entertainment amenities nearby.
“Long-stay lodging assets have become increasingly resilient and attractive as an asset class,” says Eu. It has less income volatility compared to hotels, she adds.
The group is also rethinking its brand proposition, especially its long-stay brands. “I think it is timely for us to sharpen the focus of all our hospitality brands,” says Eu. She also believes it is time to offer more unique experiences beyond the traditional hospitality services.
“Travellers are opting to stay for longer periods, mixing business and leisure into a single trip,” she adds. “There is a willingness to pay premium rates for hospitality experiences that combine quality and value with memorable local touchpoints. This is the direction that Frasers Hospitality will head towards.”
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