Despite the lacklustre economic performance, the hospitality sector performed well in 2014 due to
increasing visitor’s interest in Japan, proliferation of low cost carriers, the phased abolition of
short-term visit visa and the weakened yen. According to Japan National Tourism Organization, total
visitor arrivals into Japan for 2014 reached a historical high of 13.4 million, representing a whopping
29.4% increase YoY. With the acquisition of a prime asset located in the heart of Shinjuku, Tokyo, we
believe we have deepened our presence in Japan at the right market cycle.
Our properties in Japan delivered strong performance in 2014; RevPAU for our serviced residence
properties in Japan increased 6% from S$122 in 2013 to S$129 in 2014. Our 19 rental housing
properties in Tokyo continued to achieve strong and stable occupancy of approximately 95%, while
the 12 rental housing properties outside Tokyo achieved occupancy of over 95%.
2015 Outlook
According to EIU, Japan’s GDP growth will gain pace to reach 1.1% in 2015. To reinvigorate the
economy, the government decided to postpone the 2% sales tax hike originally planned in October
2015 to April 2017. Japan’s goal to restore fiscal health and overcome deflation will largely depend
on the government’s commitment to credible structural reforms. As such, the Japanese government
pledged to lower corporate tax to below 30%, over several years, starting from April 2015.
Furthermore, the government has proactively set up a “Special Zone for Asian Headquarters Project”,
targeting to have 500 foreign companies set up regional headquarters or R&D centres in Japan by
2016. This should boost the demand for both short and long-term accommodation. Together with the
government’s plan to double the annual number of foreign visitors to 20 million by 2020, a weaker yen
and renewed interest in Japan leading up to the 2020 Olympics, the uptrend in hospitality
performance is expected to continue.
Malaysia
1 Property 207 Units
S$’million
Total Revenue (2014)
3.2
Total Gross Profit (2014)
1.1
Valuation as at 31 December 2014
63.8
Ascott Reit owns one freehold serviced residence in Kuala Lumpur, Malaysia. The 207-unit Somerset
Ampang Kuala Lumpur has a prime location in Jalan Ampang and is within proximity to business
offices, embassies and shopping centres. The nearby Ampang Park Light Rail Transit station offers
quick intra-city transportation.
The average length of stay at the property is more than three months.
Gross Rental Income
(S$’000)
Agreed
Property
Value
(S$’million)
FY 2014 FY 2013
Somerset Ampang Kuala Lumpur
1
3,197
–
67.4
Revenue Per Available Unit (S$)
FY 2014
FY 2013
Somerset Ampang Kuala Lumpur
1
101
–
2014 Review
This year marked Ascott Reit’s first foray into Malaysia, an economy which has been experiencing
steady growth over the past few years. According to EIU, Malaysia’s GDP grew by 5.9% in 2014,
largely driven by resilient domestic demand as well as a pro-business friendly environment. Despite
1 The property was acquired on 18 August 2014.
Operations Review
76 | Ascott Residence Trust Annual Report 2014
