THE Ascott Group is paying $217.5 million to acquire two prime properties that will be turned into service apartments to meet surging demand from long-stay visitors and expatriates.
Its acquisitions, due to be completed in about three weeks, are part of the group's strategy to double its local portfolio to 1,600 units by 2010.
The most prominent property is the 20-storey Asia Insurance Building at Finlayson Green - at one time, one of South-east Asia's tallest buildings.
Ascott will pay the Asia Life Assurance Society $109.5 million for the block, which it aims to turn into a luxury property of about 100 units targeted at corporate travellers. It will be known as Ascott Raffles Place.
'It will be the flagship property of our Ascott global brand. It will be the best property that we have,' said managing director and chief executive officer Cameron Ong.
The other property - Hotel Asia on Scotts Road - was believed to have been fought over by about 20 developers, including the giant Lippo Group, before Ascott secured it for $108 million. This figure includes $4.3 million for the hotel management company.
Ascott, the service residence arm of property giant CapitaLand, will retain the staff and run the hotel for a year or so, said Mr Ong.
But the property will likely house another Ascott brand project or one under its upper-tier Somerset brand.
The two properties will eventually add about 300 or more units to Ascott's local portfolio.
Mainboard-listed Ascott is already the world's largest service residence owner-operator outside the United States. Its acquisitions come at a time when the service apartment sector here is experiencing rising occupancies and rates.
Tourism is also poised for increased growth with a government initiative to double visitor arrivals to 17 million by 2015 and triple tourism receipts to $30 billion by 2015.
Ascott chairman Lim Chin Beng said: 'In recent years, the supply of high-end, good quality accommodation in Singapore has been reduced as a number of four- and five-star hotels have been converted into condominiums.''
With the Government's efforts to attract more visitors, Ascott's proposed acquisitions will be 'timely' to cater to the expected rise in demand for good quality accommodation for extended stay, he said.
Ascott Raffles Place will replace the firm's only Ascott-branded property here, The Ascott Singapore in Scotts Road, which was sold together with Scotts Shopping Centre to Wheelock Properties in 2004.
Mr Ong described the proposed Ascott Raffles Place as the 'best place'. It will be near one of the integrated resorts, well-placed for the central business district (CBD) and near Collyer Quay, which will be redeveloped into a lifestyle hub.
'The whole place will be revitalised and that will give us a very good platform to bring back life to the CBD area,' said Mr Ong.
The project will see the Asia Insurance Building, erected in the early 1950s and famed across the region for its height, refurbished and brought back to its former glory, added Mr Ong.
The 999-year leasehold office building has a gross floor area of about 150,000 sq ft. Ascott's purchase price works out to $727 per sq ft.
Its price for the freehold Hotel Asia is about $720 psf of potential gross floor area.
Hotel Asia has a potential gross floor area of about 150,700 sq ft and a land area of around 35,900 sq ft.
Ascott's plan, said Mr Ong, is to enhance the two properties and hold them before they are ready to be injected into its pan-Asian real estate investment trust called Ascott Residence Trust.
On another front, Ascott will soon announce plans for a Citadines property here, catering for about 180 units.
Citadines is a European value-for-money brand that Ascott acquired in 2004. It is employing it in its expansion plans in Asia.
Ascott, whose global portfolio now totals more than 16,000 units, is targeting to achieve 25,000 units by 2010.
joyceteo@sph.com.sg
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