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That $345 million divestment was to Wheelock Properties (Singapore), which plans to redevelop the buildings into luxury apartments and an upmarket retail podium. Wheelock is expected to make a handsome profit from the project, given that it bought the prime Scotts Road property on the eve of a recovery in the luxury housing sector.

Put another way, did Ascott, which is part of CapitaLand Group, misread the market by divesting the prime property too early?

Ascott managing director and CEO Cameron Ong, who took the helm of the company in August 2004, defended the group's move when contacted by BT this week. 'That decision was made to meet two key objectives - first, to lighten our assets at the time as our gearing was very high, and second, we needed the funds to buy the remaining 50 per cent of the Citadines chain in Europe.'

Besides the sale of the Scotts Road property, the group has also sold other assets since, like Liang Court Shopping Centre and The Ascott Mayfair in London. And the move earlier this year to float its pan-Asian service residences trust raised about $270 million net.

In all, Ascott paid a total consideration or enterprise value of about $800 million for Citadines, comprising full equity in the chain and all its debt. Had Ascott gone on to buy the rest of Citadines without selling The Ascott Singapore/Scotts Shopping Centre, its net debt and net gearing ratio would have shot up from $562 million and 0.42 to more than $900 million and 0.72 respectively. Instead, it has managed to keep the figures more or less unchanged because of the various divestments.

'The Citadines acquisition has given us a substantial leap in global coverage. Today, we're the largest international service residences company outside the US with over 16,000 service residence units in 17 countries across Asia-Pacific, Europe and the Middle East. The Citadines has provided The Ascott Group with another growth engine as we work towards achieving our target of 25,000 units by 2010,' Mr Ong said.

Critics argue that however important the Citadines chain has been to Ascott's growth, the company need not have sold its prime Scotts Road property to fund it. 'They could have obtained funding by securitising the earnings stream from their existing service residences, for instance,' suggests the research head of a foreign stockbroking outfit.

Ascott sources suggest that an additional reason for divesting The Ascott Singapore service residences was that it's an ageing property that requires substantial refurbishment and maintenance, and that the value of the site lies in redeveloping it, as Wheelock correctly spotted.

Still, critics argue that Ascott's parent, CapitaLand Group, could have bought the site and undertaken the redevelopment itself, not just for service residences but also apartments for sale, instead of selling it to an outsider. Perhaps. But few could have foreseen the upturn coming in the high-end residential market.

As well, there has been a sea change in prospects and potential for the hospitality market.

Yields from service apartments in Singapore were much lower than in Europe two years ago, which would have helped Ascott justify selling its Singapore flagship property to help fund the Citadines acquisition.

However, the government's decision last year to go ahead with two integrated resorts with casinos has dramatically improved the outlook for the Singapore hospitality market. Already, occupancies and room rates for hotels and service residences have risen substantially over the past 18 months.

The consolation for Ascott now is that it will have a new property on Scotts Road, although on a less prime stretch. Mr Ong argues that the Hotel Asia site should make for a nicer, quieter location for a service residence than the busy location of The Ascott Singapore. More importantly, he points out, the acquisition, also announced this week, of the historic Asia Insurance Building at Finlayson Green, for restoration into a grand-dame type service residence building, The Ascott Raffles Place, will make for a nicer flagship property to replace The Ascott Singapore.

Perhaps. But as Wheelock reports its earnings over the next few years and analysts study how much of it comes from its Scotts Road project, Ascott and CapitaLand may have reason to sigh over their divestment.