However, we expect residential sales to gain pace in Beijing following the credit easing announced
by the China central bank in November 2014. In the meantime, as part of our proactive asset
management, the Group has commenced leasing out the apartments to earn operating income
without affecting the strata sale process.
Six of the ten properties in China have embarked on Asset Enhancement Initiatives (AEI) in 2014
namely, Ascott Guangzhou, Citadines Biyun Shanghai, Citadines Xinghai Suzhou, Somerset Grand
Central Dalian, Somerset Olympic Tower Property Tianjin and Somerset Xu Hui Shanghai. Of which,
the AEI at Somerset Grand Central Dalian, Somerset Olympic Tower Property Tianjin are currently
ongoing, and are on track to complete in 2015 while the ongoing AEI at Somerset Xu Hui Shanghai
is expected to be completed in 2016. As a result, excluding newly acquired properties which had
lower ADR, overall RevPAU for our properties for FY 2014 decreased 6% YoY.
2015 Outlook
As part of the Chinese government’s strategy to stimulate domestic consumption, especially in the
services sector, GDP in China is likely to grow at a slower pace of 7.1%, according to EIU.
Ascott Reit’s properties in Tianjin, Guangzhou, Shenyang and Shanghai will benefit from regional
developments: the earmarked development of the Bohai region and an aerospace industry zone in
Tianjin; further liberalisation through free trade zones in Tianjin and South China; improved
connectivity of Shenyang through infrastructural development; as well as the opening of mainland
China’s first Disneyland in Shanghai.
Mobile phone giant Samsung has set up manufacturing plants in Xi’an, providing for more corporate
international presence. Dalian, a city combining both a good living and business environment is now
the prime financial centre in the North East China region, benefitting from the government’s plan to
turn it into a centre for air cargo, logistics and finance. Wuhan, has recently become one of China’s
biggest cities by population, thus increasing demand for accommodation organically.
Overall, China’s tourism and business travel market will continue to experience healthy growth over
the next few years, especially if global recovery gains momentum. As the country continues to pursue
structural reforms and more sustainable economic development, China will remain an attractive
market with strong growth potential.
Pursuing Growth | 69
