Hotel and serviced residence owner Far East Hospitality, which completed a USD$583.8 million Singapore listing last month, aims to tap Southeast Asia's booming tourism demand and grow its portfolio value by 50 percent over the next two years, its chief executive said.
Far East Hospitality expects to acquire a hotel and two serviced residences -- Orchard Parksuites and Orchard Scotts Residences -- from its sponsor Far East Organisation within the next 24 months, increasing its portfolio by more than SGD$1 billion (USD$813.5 million) from SGD$2.1 billion currently, CEO Gerald Lee said.
The trust, which owns 11 Singapore properties, raised SGD$717.6 million (USD$583.8 million) last month in its initial public offering that was the largest in the city-state this year and attracted strong interest from investors due to its yields and exposure to Singapore's tourism industry.
"We're seeing countries like Indonesia and the Philippines opening up and seeing healthy economic growth... that will help to drive business travel," Lee said in an interview.
Singapore real estate investment trusts have risen 27.5 percent this year, driven by demand for stable yields and income in a broader market that saw the Straits Times Index gain 14.4 percent.
Besides buying assets from its sponsor, Far East Hospitality is also in discussions to acquire properties from third parties, Lee said, but declined to name them.
Rising income levels in emerging Southeast Asian countries and the growth of budget carriers will also help to boost leisure travel, benefiting Far East Hospitality, as the region accounts for the bulk of its customers, he added.
Although Singapore's manufacturing and financial sectors may be slowing, the mood in tourism-related sectors remains buoyant as the city-state benefits from strong economic growth in the region and the opening of new attractions such as Gardens by the Bay.
Demand from the rising number of visitors to Singapore, estimated by the tourism board to hit 17 million by 2015, is expected to outstrip growth in supply of hotel rooms, Lee said.