CapitaLand Investment : 9CI +1.06% (CLI) is banking on the resurgence of the hospitality sector, with its lodging arm The Ascott announcing this month that it is acquiring serviced apartment provider Oakwood Worldwide from Mapletree Investments for an undisclosed amount.

 

This will add some 15,000 units and 81 properties to Ascott&rsquo s portfolio. Of those units, 8,500 are operational and will boost Ascott&rsquo s recurring-fee income streams when the deal is completed in Q3 this year.

 

The deal also gives Ascott exposure to new markets such as Cheongju in South Korea, Zhangjiakou and Qingdao in China, Dhaka in Bangladesh, as well as Washington D.C. in the United States.

 

Once the acquisition is complete, Ascott&rsquo s footprint will span 150,000 units across 900 properties in 39 countries &mdash putting it firmly on track to meet CLI&rsquo s target of 160,000 units under management by 2023, if not earlier.

 

CGS-CIMB analyst Lock Mun Yee said in a recent report: &ldquo In the longer run, this deal could expand Ascott&rsquo s network of asset owners and strategic alliances to drive growth, as more than 90 per cent of Oakwood&rsquo s asset owners are new to Ascott.&rdquo

 

Co-living is another area of focus for CLI &mdash a move analysts say is just as much a diversification strategy into an adjacent space as it is an attempt at claiming first-mover advantage in an emerging trend. Aside from co-living, CLI has entered into the resilient long-stay lodging segments such as student accommodation and multi-family assets.

 

While still in its early stages, its co-living brand, lyf, is targeting 150 properties with over 30,000 units by 2030 to grow fee income. As at April this year, Ascott had 17 lyf properties with more than 3,200 units in 9 countries under its belt. Three more properties are slated to open this year.

 

The big story for CLI this year, however, is likely to be the recovery in the travel industry. As more countries pivot to endemic living, revenge travel has resulted in a surge in travel demand.

 

CLI&rsquo s lodging business is likely to emerge as a major earnings driver this year, following a turnaround in Q1 2022. Revenue per available unit (RevPAU) rose 34 per cent to S$71 from S$53 in the corresponding quarter a year ago, spearheaded by Europe and Singapore. China was an outlier, with RevPAU flat at S$68 in Q1 2022, and may continue to lag other regions in recovery after the recent flare-up in Covid cases prompted extended lockdowns in certain Chinese cities.

 

In Q1 2022, CLI&rsquo s lodging management segment posted a 31 per cent year-on-year increase in revenue to S$55 million, while its real estate investment business and fund-management business chalked up growth of 28 per cent, to S$403 million and S$132 million, respectively. Its property management business shrank 4 per cent to S$75 million.

 

RHB analyst Vijay Natarajan reckons the sharp pick-up in travel this year should propel the stock. But he also flagged emerging risks in the medium term: inflationary pressures, a challenging macroeconomic outlook, and a manpower crunch.

 

The shortage of workers has started to hamper travel&rsquo s return to pre-Covid levels last week, for example, London&rsquo s Heathrow Airport limited the daily number of departing passengers to 100,000 in the wake of protracted delays, snaking queues and baggage issues. Understaffed airlines in the US and Europe have also axed flights as they struggle to rehire workers laid off during the pandemic.

 

And while pent-up demand means that people are willing to splurge on higher-than-normal airfares and hotel rooms right now, Natarajan said it remains to be seen how long this can be sustained.

 

Still, the cabin fever is real. Travel-starved consumers continue to head to the border in droves, eager to spend savings accumulated over the last 2 years. CLI&rsquo s latest bet on the hospitality sector will give it greater size and scale as the hospitality sector continues on its recovery path.

 

CapitaLand Development (CLD) is acquiring a prime mixed-use site in Thu Duc City in Ho Chi Minh City, with an estimated total gross development value of about $1 billion.

 

Thu Duc City has been earmarked by the Vietnamese government to be an economic and technology hub. The mixed-use project with an area of about 8 hectares will comprise over 1,100 high-end residential units and shophouses to meet the residential demand from Thu Duc City' s growing workforce.

 

CLD&rsquo s acquisition of the site is expected to be completed by 4Q2023. The project is expected to be launched in 2024 and scheduled for completion by 2027.

 

Thu Duc City is set to home several tech companies, medical facilities, logistics and commercial developments.

 

As it attracts more residents and businesses, the city is expected to contribute 30% of Ho Chi Minh City&rsquo s economic growth and 7% of Vietnam&rsquo s each year.

 

&ldquo Given its strategic location and excellent connectivity, the prime mixed-use project in Thu Duc City will add to CLD&rsquo s quality residential portfolio in Vietnam where we have over 13,000 units across 17 properties,&rdquo says Ronald Tay, CEO of CLD (Vietnam).

 

&ldquo Leveraging CLD&rsquo s global real estate expertise in delivering high-quality residential projects, we are confident of transforming our latest site in Thu Duc City into a vibrant and iconic mixed-use development that will meet the evolving aspirations and needs of discerning homebuyers and consumers,&rdquo he adds. &ldquo We will continue to seek more investment opportunities across various asset classes to strengthen CLD&rsquo s position as a leading developer in Vietnam.&rdquo

 

CAPITALAND Investment Limited : 9CI +0.79% (CLI) on Monday (Jul 4) announced its wholly-owned lodging business unit The Ascott is acquiring serviced apartment provider Oakwood Worldwide from Mapletree Investments.

 

While the purchase consideration was not disclosed, CLI estimates the transaction will add some 81 properties and about 15,000 units to Ascott&rsquo s global portfolio.

 

About 8,500 of Oakwood&rsquo s operational units are expected to immediately contribute to Ascott&rsquo s recurring fee income streams upon the acquisition&rsquo s slated completion in Q3 2022.

 

Another 30 properties and 6,500 units are in the pipeline for Oakwood, bringing CLI&rsquo s global portfolio post-acquisition to over 150,000 units in about 900 properties across over 200 cities in 39 countries.

 

With the acquisition of Oakwood, new markets added to Ascott&rsquo s portfolio will include Cheongju in South Korea, Zhangjiakou and Qingdao in China, Dhaka in Bangladesh, as well as Washington DC in the US.

 

CLI said the broadened geographical diversification will provide further fee income stability for Ascott, placing CLI in a stronger position to take advantage of global travel recovery post Covid-19.

 

Oakwood Premier Tokyo and Oakwood Premier Coex Center Seoul count among Oakwood&rsquo s flagship properties. New properties from the apartment provider such as Oakwood Premier Melbourne and Oakwood Hotel Oike Kyoto will also add to the group&rsquo s destination highlights, said CLI.

 

&ldquo Ascott&rsquo s acquisition of Oakwood brings about an immediate boost to our units under management and franchise contracts,&rdquo said CLI&rsquo s chief executive for lodging, Kevin Goh.

 

&ldquo We intend to build on the strong reputation and heritage of the Oakwood brand, especially in markets across South-east Asia, North Asia and North America. Oakwood will continue to grow alongside Ascott&rsquo s current portfolio of global brands as we continue to build growth momentum for our lodging business.&rdquo

 

CAPITALAND Investment : 9CI -2.36% (CLI) has established its first onshore renminbi fund in China as part of its asset-light strategy to grow its funds under management.

 

The property player holds a 12 per cent stake in the 700 million yuan (S$144 million) fund, in partnership with a domestic asset management company, CLI said on Wednesday (Jun 22).

 

The company also said the fund is acquiring a quality office building in Shanghai &ldquo at an attractive price&rdquo , where the transaction is expected to be completed in July 2022.

 

Simon Treacy, chief executive of private equity real estate, real assets at CLI, said: &ldquo We are increasing our fundraising channels by tapping on China&rsquo s domestic capital, which we believe represents a deep pool of investable capital that enables CLI to further build on its experience and track record in the country.&rdquo

 

Treacy noted that CLI will look at launching more renminbi funds, as well as work with both its domestic and international network of capital partners to capture investment opportunities in China across different asset classes.

 

As at Mar 31, CLI has a portfolio of more than 200 properties across over 40 Chinese cities, with total assets under management of S$46 billion in China.

 

OCBC Credit Research says according to reports from South China Morning Post, CapitaLand Development (CLD) is offering a buy now, pay later (BNPL) scheme for a residential project in Vietnam, exclusively available to buyers in Hong Kong, with 30% down payment. In addition, the project is fully furnished, so it is easy for the buyers to move in.

 

The privately held CLD is offering 59 fully furnished flats in Zenity, a residential project in Ho Chi Minh City, exclusively available to buyers in Hong Kong, at prices starting from HK$3.5 million, the SCMP says.

 

This ties in with a press release by the CapitaLand Group. On June 16, CapitaLand announced it is launching Zenity, which it describes as a " rare riverside project situated in District 1 CBD" , with Asia Bankers Club, Golden Emperor and Ashton Hawks, offering all of their exclusive foreign quotas in their launching event that will be held on June 25-26.

 

Under the BNPL scheme, units at the riverside project situated in District 1, close to Nguyen Hue Walking Street and Ben Thanh Market, can be handed over to buyers upon 30% down payment. That means 10% upon signing of the sale and purchase agreement and 20% in the third quarter. The rest can be paid by end-September 2024, SCMP says.

 

The payment plan is available to both foreign investors and local buyers. Foreigners may not be eligible for mortgage loans in Vietnam under local regulations, according to OCBC Credit Research.

 

" This move is likely due to slowing residential sales in Vietnam, with 46% y-o-y reduction in property sales in 1Q2022 according to Savills while average prices declined by 14%. Meanwhile, developers find difficulty to raise funds via bonds and loans," OCBC Credit Research says. The slowdown in sales is reportedly due to the prolonged Covid pandemic and recent measures from the government to curb speculation, the research note adds.

 

On the other hand, anecdotal evidence, and the CapitaLand press release indicate that many international corporates moved their manufacturing bases to Vietnam during the pandemic in an attempt to diversify their risks. As a result, Vietnam' s Foreign Direct Investment (FDI) has increased exponentially, recording US$$10.8 billion net FDI inflow in the first four months of 2022, up 88.3% y-o-y.

 

" Within Vietnam, the processing and manufacturing industry has gained the crown with the largest amount of investment summing up to US$6.2 billion, which translates to 57.2% of total FDI received. The second place goes to the real estate industry, with US$$2.8 billion invested which is 26.1% of total investment," the CapitaLand press release says.

 

Over the years, multinational giants like Apple, Samsung, LG and Microsoft have been expanding their manufacturing bases in Vietnam that have led to the rise of the middle-class population. " HCMC has also become the city with the highest growth in the number of UHNWI. In 2021, there are 1,234 people with a net worth of US$$30 million or more. There are 72,135 [people] with assets accumulating to over a hundred million US dollars, it is estimated that the number of UHNWI is increasing at an annual rate of 26%, meaning that there will be a millionaire in every 850 people in Vietnam in just 4 years," the press release says.

 

Separately, the listed CapitaLand Investment has established its first onshore renminbi fund worth RMB700mn ($144 million) in China, holding a 12%-stake in partnership with a domestic asset management company. The fund is acquiring a quality office building in Shanghai at an attractive price according to CLI. CLI is looking to further tap on China&rsquo s domestic capital and launch more RMB funds to capture special situation and other investment opportunities in China.