Ascott heads east for growth

THE Ascott Group Ltd, with serviced apartments in gateway cities from Beijing to Brussels, is turning to emerging markets in Asia and Europe for its next stage of growth, the Chief Executive Officer Jennie Chua said.

The company, with the largest chain of serviced residences outside the United States, is expanding into the former Soviet Union for the first time with two properties in Kazakhstan, Bloomberg News reported.

It's also adding more locations in smaller Indian and Chinese cities to tap the world's two fastest-growing major economies.

"We think there are more grounds in Asia, the Gulf Cooperation Council countries, and new Europe," Chua said. "We have now cast our eye on the oil-producing areas."

The expansion is part of the Singapore-based company's plan to boost the number of apartment units it manages or owns to more than 25,000 by 2010 from the present 19,500.

Chua, 63, is betting that Ascott's experience in key cities will translate to success in smaller and newer markets.

These cities are "underserved," said Wallace Chu, an analyst at DBS Vickers Research Pte. "They are going into high-yield, high-risk regions but they still have a big chunk of things that are growing."

Chua, the former chief executive officer of Raffles Holdings Ltd, which owned the 120-year-old Raffles Hotel in Singapore, took over as CEO this month. Under Chua, Raffles had expanded into newer markets such as Osaka in Japan, the French Polynesia and the Caribbean.

For Ascott, which already runs the biggest chain of serviced apartments in China, the expansion will be focused on smaller cities as companies such as Intel Corp and Airbus SAS expand beyond the key markets of Beijing and Shanghai.

"I don't think we need more in the gateway cities," Chua said. "Let's go into Chengdu, Dalian, Xi'an. The macro picture is the gross domestic product growth. Infrastructure is being built and railway lines are there."

Ascott shares have fallen 8.1 percent this year, below the 13 percent increase in the Straits Times Index. The stock fell one Singapore cent, or 0.7 percent, to USS$1.48 at 9:30am yesterday.

Ascott, which paid about 158.5 million euros (US$216 million) for the Citadines brand in Europe in 2002 and 2004, will also expand into new European cities.