Friday, February 23, 2007

Will Ascott's new year red packet set a new trend?

Ascott Group is to receive a huge red packet this lunar new year when it sells Hotel Asia in downtown Singapore for S$147 million. That would register a cool S$22.2 million profit for Asia's biggest serviced-apartment operator. The Singapore-based company bought the property in July for S$104 million to tap the growing number of tourists to the island.

Singapore's longest economic expansion in more than five years has caused home prices and office rents to rise. Record tourist arrivals helped increase the average price of a hotelroom in the city-state by 38 percent in the past five years. But while Ascott is still sticking to its target of increasing the number of apartments it manages in Singapore to 1,600 by 2010, from 1,054, the offer proved too good.

"Ascott was approached by the buyer and the offer presented to us is very attractive and timely" Cameron Ong, Ascott's chief executive officer, said in a statement. "Ascott will continue to look for potential sites to expand our presence here."

Ascott declined to name the buyer but whatever the case, many developers would be keen to take advantage of the property price surge. Scarce office space in prime districts will make the property prices escalate to almost dizzying heights. CapitaLand has already sold its share in a Singapore downtown office building called Samsung Hub for S$152.9 million. Could this be the start of a new trend? Will the year of the pig be a prosperous year for developers?

What do you think?