Frasers Hospitality Accelerates Growth Asset Recycling And Management Contracts
This year, the hospitality and lodging business unit of Frasers Property, Frasers Hospitality, has made strategic moves in both divesting Singapore assets and expanding its international footprint. According to Eu Chin Fen, CEO of Frasers Hospitality since January 2023, the company is always on the lookout for opportunities to recycle and redeploy capital as part of its international expansion strategy in the coming years. Prior to her current role, Eu 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, which equates to $543,131 per key. The hotel has since been rebranded as Dorsett Changi City Singapore, under the management of Dorsett Hospitality International (DHI). DHI is a subsidiary of Hong Kong-listed Far East Consortium International, one of the shareholders in the consortium, alongside Singapore-listed Heeton Holdings and Singapore family office Fortez Capital.
Frasers Property sold the 313-key Capri by Fraser, Changi City for $170 million, or about $543,131 per key. (Picture: Samuel Isaac Chua/)
The hotel was originally opened as a Capri in 2012 and was later sold to Frasers Property in 2014 for $203.4 million. It is located within a mixed-use development that includes Changi City Point shopping mall and has a remaining lease of 45 years out of a 60-year lease awarded by JTC. In March this year, FHT, who had the right of first refusal, rejected an offer from its sponsor, Frasers Property, to purchase the property. As a result, Frasers Property sold the asset to a third party.
Eu notes that real estate is a cyclical business and it is important to recognize when properties have reached the end of their capital cycle in order to identify opportunities where capital can be recycled into other ventures. In May, Fraser Residence River Promenade was sold to Singapore-listed Tuan Sing Holdings for $140.889 million. The serviced apartments, which opened in September 2023, consist of 72 units and the price translates to $1.96 million per key. They are located on Jiak Kim Street, within a four-storey block that is part of a mixed-use development that includes Frasers Property’s 455-unit luxury condo, called Rivière, which was completed last year and is fully sold.
Established 26 years ago, Frasers Hospitality manages over 16,000 serviced apartments and hotel rooms in 20 countries. The company owns and operates six different hospitality brands: Fraser Suites, Fraser Residence, Fraser Place, Capri by Fraser, Moderna by Fraser, and Malmaison, which was acquired in 2015.
“We have established ourselves as a premium serviced apartment operator on an international scale,” says Eu. “We have shown our ability to add value to the assets we manage.”
Read also: Frasers Hospitality debuts in Taiwan with Fraser Residence Taipei
Amidst a challenging global environment with rising operational costs, Frasers Hospitality is expanding its presence in existing markets through partnerships with established local players, in order to increase the revenue contribution from management contracts, she adds.
New management contracts were announced this year, with three new properties opening in Bahrain, Chengdu and Shanghai in the first half of 2024. Another nine properties are scheduled to open in the next two years across China and Vietnam. Of the eight new management contracts that were announced this year, three are in Shanghai: the 210-key Fraser Place Wujiaochang Shanghai, which opened in June, and the 307-key Modena by Fraser Wujiaochang, which will open next year. The 205-key Fraser Place Pudong Shanghai 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 in One Bangkok, a new $3.9 billion mixed-use development by TCC Assets, a subsidiary of Thai conglomerate TCC Group. These properties include the 261-key Fraser Suites Bangkok in 2026 and the 210-key white-label serviced apartments. 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.
Read also: Frasers Hospitality expands into Cambodia, to launch three properties
Over the next four years, Frasers Hospitality intends to open 20 new properties, including the nine that are scheduled to open in the next two years. Although the hospitality group will likely continue to focus on established markets and gateway cities, Eu says that the company is also looking for opportunities in emerging markets such as Indonesia, Cambodia, Vietnam, Malaysia, and the Middle East.
For example, 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 which was 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.
In addition to the signature brands of Frasers Suites and Fraser Residence, Eu sees an opportunity to establish other brands under Frasers Hospitality’s umbrella in the Middle East, such as Capri. She notes that there is a demand for lodging in the Middle East from project teams working on short-term assignments, as well as from professionals who visit regularly, such as consultants. As such, Eu believes there is potential for the company’s serviced apartment business in the region.
The vision for Parktown Residence is to seamlessly fuse contemporary homes with lifestyle facilities, elevating the concept of urban living and establishing a dynamic community in Tampines North. With the addition of Parktown Residence Condo, this strategic approach is set to redefine the standards of modern living in the bustling neighborhood.
Frasers Hospitality is optimistic about the long-stay accommodation segment, given the challenges in the residential rental market across many major cities, with demand exceeding supply. “Our capital partners are also keen on investing in premium accommodation assets,” says Eu.
In 2027, the company will launch its first premium serviced apartment in Taipei, Taiwan. Located in the prime Beitou district, the 200 serviced suites Fraser Residence Taipei is being developed in partnership with Taiwanese real estate developer Hung Tai Group. Frasers Hospitality will manage the serviced residences when they are completed.
Last year, in May 2023, Frasers Hospitality formed partnerships with US real estate group Tishman Speyer and Asian real estate investment firm Alyssa Partners in China and Japan, respectively. These 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 was $170 million.
Frasers Hospitality is also partnering with Yotel to launch the brand’s first property in Japan in early 2025. The site, which was acquired and developed by Frasers Hospitality, is located within walking distance of Tokyo Station and offers dining, shopping, and entertainment amenities nearby.
“Long-stay lodging assets have become increasingly resilient and attractive as an asset class,” says Eu. She highlights that this segment generally has less income volatility compared to hotels. The company is also reevaluating its brand proposition, particularly for its long-stay brands. “I think it is time to sharpen the focus of all our hospitality brands,” says Eu. She believes that it is also an opportune time to offer unique experiences beyond 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 be moving towards.”