Frasers sees profits in niche apartment market

Service units cater to needs of executives at multinational corporations

Although China's thrift campaign has taken a bite out of the luxury hotel industry, there is a niche residential market that has scarcely been touched.

That is serviced apartments for expatriates, which are in demand because multinational corporations are still starting or expanding operations in China, particularly in inland cities.

Frasers Hospitality Pte Ltd, a Singapore-based global hospitality asset management and operations group, last week opened another residence under one of its brands: Modena, in the central city of Wuhan, Hubei province, a move that underscored its ambitions in the mainland market.

Wu Jiang, sales and managing director at Frasers China, declined to offer specific data on the company's growth in China but said it greatly outperformed its peers in ordinary hotel industry.

"We have a business performance that ordinary hotel operators could only envy of, both in terms of investment returns and occupancy rates. Our revenue is steadily growing much faster than theirs," he said.

The average occupancy rate at several of Frasers' projects in China exceeds 90 percent and in other projects the rates are more than 80 percent, he said.

Frasers, a group with properties across Europe, North Asia, Southeast Asia, the Middle East and Australia, operates 14 serviced residences in 10 cities in China. Most of those cities have a heavy concentration of foreign businesses.

These cities are: Beijing, Shanghai, Chengdu, Guangzhou, Nanjing, Shenzhen, Suzhou, Tianjin, Wuxi and Wuhan.

Wu said there is careful and often prolonged due diligence before the company's entry into any market. The city that it selects has to have a sizable expatriate community and strong growth outlook.

Frasers also carefully selects partners in each market. The latest project, for example, is a co-project between Frasers and China Vanke Co Ltd, the largest residential developer in China.

In Wuhan's case, the newly opened Modena Zhuankou is centrally located within the Wuhan Economic and Technological Development Zone, a national-level industrial zone. It is close to global enterprises including giant vehicle producers Peugeot, Citroen and Renault.