Speech by Mr Cameron Ong, Managing Director & CEO, The Ascott Group For Immediate Release NEWS RELEASE ASCOTT EXPANDS GLOBAL FOOTPRINT TO RUSSIA WITH INITIAL FUND OF US$100 MILLION AND MANAGEMENT CONTRACT WITH AMTEL First Singapore-based international serviced residence company in Russia, targets to secure 1,000 serviced residence units by 2010 Singapore, 7 February 2007
– The Ascott Group (Ascott) has signed a Memorandum Of Understanding (MOU) with Amtel Properties Development (Amtel) to jointly set up an initial fund of US$100 million to acquire and develop international-class serviced residences in strategic business districts within Moscow and St Petersburg. Amtel is part of Amtel Group of Companies which has diverse businesses in the Commonwealth of Independent States (CIS); it owns the 4th largest tyre company in Europe and has businesses ranging from petrochemicals trading to real estate.
Ascott will take 50% equity in the fund and manage the serviced residences, while Amtel will take the remaining 50% equity, identify potential sites and develop the serviced residences. Both parties will build on this initial fund of US$100 million to launch 1,000 serviced residence units in Russia by 2010.
In addition to the MOU, Ascott has been awarded a management contract by Amtel for a 150-unit serviced residence located in one of Moscow’s technology business parks along Kulakova Street. The property to be named Somerset Strogino, Moscow is expected to be completed in 2009. Ascott will manage the property for five years, with the option to extend the contract for another five years.
Mr Lim Chin Beng, Ascott’s Chairman said: “Ascott is the largest international serviced residence company outside of the United States with presence in over 40 cities and 20 countries, where it operates three globally-recognised brands, Ascott, Somerset and Citadines. With its partnership with Amtel, Ascott is the first Singapore-based international serviced residence company in Russia. Ascott will have first-mover advantage and is in a position to capture strong market share in Russia.”
Mr Liew Mun Leong, Ascott's Deputy Chairman, and President and CEO of its parent company CapitaLand Group said: "Russia is currently enjoying strong foreign direct investment (FDI) and economic growth, which can be translated into high growth potential for the tourism and hospitality industry. With the rise of Russia as a heavy weight in the global economy, the timing is right to enter the market. Ascott is the best poised within the CapitaLand Group to first tap into the Russian market, given the positive foreign investment level, increasing business travellers, and other investment opportunities there."
Mr Sudhir Gupta, Amtel’s Founder and Chairman said: “We are pleased to partner with Ascott, a leading international serviced residence company. We are confident that with Ascott’s proven expertise in managing award-winning serviced residences around the world, we can set higher standards for the lodging business in Russia.”
Mr Cameron Ong, Ascott’s Managing Director and CEO said: “Ascott will be the first international, branded serviced residence company to enter Russia. We want to tap on the strong-demand and low-supply accommodation situation in Moscow and St Petersburg to capture a broad segment of the market with our three global brands. This initial US$100 million fund will give us a good head start in Russia. We will be building on this fund to achieve our target of securing 1,000 serviced residence units in Russia by 2010.”
According to statistics from Economist Intelligence Unit (EIU), Russia’s FDI grew 55% from US$15.2 billion in 2005 to an estimated US$23.5 billion in 2006. With FDI into Russia expected to remain positive and its economy and tourism continuing to grow, there is strong growth potential for the hospitality industry, including the serviced residence sector in Russia.
According to Populationdata 2006, Russia’s capital city, Moscow has a population of more than 13 million and is the largest European city. While Moscow’s population is about 9% of Russia’s population, it generates 20% of Russia’s gross domestic product. Foreign arrivals to Moscow are expected to reach 5 million by 2010; however there are currently only 8,000 hotel rooms that are of international standard in Moscow.
St Petersburg, the second largest city in Russia, and the sixth largest in Europe after Moscow, London, Istanbul, Paris and Madrid, has only 4,000 hotel rooms that are of international quality. Authorities of St Petersburg have also projected that the city will be visited by about 4 million foreigners and 1.4 million Russians annually by 2008. Somerset Strogino, Moscow
The property is located along Kulakova Street in Moscow, close to the north western part of Moscow Ring Road and midway between the city centre and Sheremetyevo International Airport. Somerset Strogino will also be a five-minute walk from the new metro station in Strogino opening in 2007.
Somerset Strogino is located between two main highways, Leningradskoye and Miniskoye with several business parks in the locality. The Crocus Expo International Exhibition Centre which targets large international events, and Krylatsky Hills Business Park which houses several multinational corporations including 3M, Cisco Systems and DuPont are also close-by. About Amtel Group of Companies
Founded by Mr Sudhir Gupta in the late 1980s, Amtel Group of Companies has successfully established itself in a wide range of industries in Russia and CIS ranging from petrochemicals trading to juice manufacturing. From the late 1990s Amtel primarily focused on manufacturing and distribution of tyres. Today, Amtel-Vredestein is the 4th largest tyre producer in Europe with a 35% share of Russian automobile tyre market and sales of US$850 million. Recently Mr Gupta started investing heavily into real estate in Russia and CIS, diversifying his business interests. Amtel Properties Development has a sizeable land bank and an impressive portfolio of properties in Russia, Ukraine and Georgia. About The Ascott Group
The Ascott Group is the largest international serviced residence owner-operator outside the United States with about 19,000 serviced residence units in key cities of Asia Pacific, Europe and the Gulf region.
The Group operates three brands – Ascott, Somerset and Citadines. Its portfolio spans 47 cities in 21 countries including London, Paris, Brussels, Berlin, Barcelona and Russia in Europe; Singapore, Bangkok, Hanoi, Kuala Lumpur, Tokyo, Seoul, Shanghai, Beijing, Hong Kong and Chennai in Asia; Sydney, Melbourne and Auckland in Australia / New Zealand, as well as Dubai in the Gulf region.
The Ascott Group is headquartered in Singapore. It pioneered Asia Pacific's first branded luxury serviced residence in 1984. It also established the world’s first pan-Asian serviced residence real estate investment trust, Ascott Residence Trust in 2006. Today, the Group boasts a 23-year industry track record and serviced residence brands that enjoy recognition worldwide.
The Ascott Group’s achievements have been recognised internationally. Recent awards include Vietnam Economic Times 2006 ‘Golden Dragon Award’, The Asset’s 2006 ‘Triple A Country Award for Best Deal in Singapore’, Travel Weekly China 2006 ‘Best Serviced Residence’, Business Traveller China 2006 ‘Best Serviced Residence Brand in China’, TTG Travel 2006 ‘Best Serviced Residence’, 2006 World Travel Awards, Business Traveller Asia Pacific 2006 ‘Best Serviced Residence Brand’ and ‘Best Serviced Residence’ awards. For a full list of awards, please visit: http://www.the-ascott.com/aboutus/awards_and_accolades.html?year=2007
Listed on the mainboard of the Singapore Exchange, The Ascott Group is the serviced residence arm of CapitaLand Limited, one of the largest listed real estate companies in Asia. Headquartered in Singapore, the multinational company's core businesses in real estate, hospitality and real estate financial services are focused in gateway cities in Asia Pacific, Europe and the Middle East. The company's real estate and hospitality portfolio spans more than 90 cities in 20 countries.
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