75
Ascott Residence Trust
Annual Report 2015
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
Financials &
Additional
Information
2015 Review
According to EIU, Japan’s economy grew by 0.7%
in 2015 as compared with -0.1% in 2014. Japan
experienced an unprecedented tourism boom in 2015.
According to the Japan National Tourism Organization,
a record 19.7 million foreigners visited Japan in 2015,
nearly 50% more than a year earlier and more than
double that of 2012. The surge in visitor arrivals was
largely attributed to the continued depreciation of the
Yen, expansion of airline routes and government efforts,
which included easing of visa rules and expanding the
scope of duty-free shopping. On the other hand, the
increase in supply has not been able to match the
strong surge in demand for accommodation, with only
6,000 rooms or 6% of total room inventory in Tokyo
being added in 2015.
Consequently, our properties in Japan delivered strong
performance in 2015. Overall RevPAU for our serviced
residences in Japan increased 5% from S$129 in 2014
to S$136 in 2015 even though the Yen depreciated
approximately 6% against Singapore dollar during
the period. Our rental housing properties in Tokyo
continued to achieve strong and stable occupancy of
approximately 96%, while the rental housing properties
outside Tokyo achieved occupancy of over 98%.
In July 2015, Ascott Reit acquired the remaining 40%
stake in Citadines Shinjuku Tokyo and Citadines
Karasuma-Gojo Kyoto and made its foray into the city
of Osaka through the acquisition of a portfolio of four
rental housing properties.
As part of Ascott Reit’s active asset management
strategy to unlock the underlying value of properties
which offer limited growth potential, as well as to
enhance the quality of its portfolio, we successfully
divested six rental housing properties in the regional
cities of Japan. The properties were divested at a total
sales consideration of S$53.1 million in 2015, realising
a net gain of S$3.5 million.
2016 Outlook
According to EIU, Japan’s GDP growth is forecasted
to reach 1.2% in 2016. Moderate recovery is expected
in 2016 due to a low unemployment rate, rising wages
and low oil prices, coupled with stronger consumer
confidence. Furthermore, the Bank of Japan (BoJ)
surprised the market when it introduced an interest-
rate dimension to its quantitative and qualitative easing
programme at its January 2016 monetary policy
meeting where negative interest rates to any new
funding would be adopted effective from 16 February
2016. With this move, the BoJ intends to spur lending
and weaken the Yen in an attempt to revitalise growth
and counter mounting deflationary pressures.
Having already reached its goal of 20 million tourists
by 2020, the government is deliberating on raising the
earlier target to 30 million annual visitors by 2020. With
the government’s new tourism target, a weaker Yen
and renewed interest in Japan leading up to the 2020
Olympics and 2019 Rugby World Cup, the uptrend in
hospitality market is expected to continue.
Gross Rental Income
(S$’000)
Agreed
Property Value
at Acquisition
(S$’million)
FY 2015 FY 2014
Citadines Central Shinjuku Tokyo
1
10,267
2,205
95.2
Citadines Karasuma-Gojo Kyoto
6,034
5,441
39.9
2
Citadines Shinjuku Tokyo
8,713
8,162
84.3
3
Somerset Azabu East
3,376
3,447
79.8
1
The property was acquired on 16 October 2014. It was formerly known as Best Western Shinjuku Astina Hotel.
2
Based on the latest agreed property value of JPY3.6 billion as stated in Ascott Reit’s circular dated 29 June 2015 in relation to its acquisition
of the remaining 40% stake of the property. Ascott Reit acquired the initial 60% stake in this property based on an agreed property value of
JPY3.1 billion (approximately S$48.2 million).
3
Based on the latest agreed property value of JPY7.6 billion as stated in Ascott Reit’s circular dated 29 June 2015 in relation to its acquisition
of the remaining 40% stake of the property. Ascott Reit acquired the initial 60% stake in this property based on an agreed property value of
JPY5.8 billion (approximately S$98.1 million).
