Friday, March 25, 2011

Frasers still on track for Middle East growth

FRASERS Hospitality's plans for expansion in the Middle East in places such as Doha and Oman remain on track despite the turmoil in the Arab world, said chief executive Choe Peng Sum yesterday.

The impression that some might get is that the whole region is in trouble but that is not necessarily true, Mr Choe said.

While the occupancy rate for its property in Bahrain has fallen to about 40 per cent from 90 per cent owing to the unrest, its property in Dubai has full occupancy - some a spillover from the unrest.

'(We're) spread out and not just in one place in the Middle East... We're not in areas like Libya and Syria... I will definitely still continue to go in the Middle East. (The unrest in Bahrain) doesn't deter me from expanding,' he said.

Mr Choe, who was speaking on the sidelines of the official opening of Fraser Residence Orchard near Paragon Shopping Centre, also spoke about the group's aggressive expansion plans, which will see a strong focus on Asia.

It plans to manage a further 4,300 units over the next two years, bringing the total to 10,600 units at 64 properties across 37 cities and allowing the firm to spread its risk.

A dozen properties are planned for this year in cities such as Istanbul, New Delhi and Budapest while another 13 are expected to open next year. Frasers currently manages about 6,000 units in 40 properties in 22 cities.

The 72-unit Fraser Residence Orchard, its fourth property here, was upgraded and refurbished at a cost of $6.5 million. It has attained 80 per cent occupancy since opening two months ago.

Mr Choe said operating the Orchard Road property provided 'a very viable business', with average rates of about $11,000 to $12,000 a month. In general, rates of properties here have also risen by an average of 20 per cent from a year ago, he said.

Corporate guests from Fortune 500 companies in industries like oil and gas and shipping tend to make up a large proportion of its clientele, Mr Choe added.

Fraser & Neave (F&N) chairman Lee Hsien Yang said that Singapore will remain key on its growth agenda.

'We will open more properties in Singapore... We believe Singapore is home and even as we grow our significant footprint and network abroad, we will not neglect our home market,' he said.

Frasers will open Modena Changi City next year, bringing its local portfolio to about 900 units - about 25 per cent of the serviced residence market share.

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