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Global & Fraser to invest in serviced residence properties

- April 18, 2006, 9:28 am

Global Investment House (Global), a leading Gulf investment bank, and Fraser Serviced Residences (Fraser) of Singapore, a premier global residence management company, yesterday announced a partnership that would invest $500 million over the next five years in serviced residence properties in the region.

Under this partnership, the new hospitality holding company based in Kuwait, will have an exclusive right to develop and own Fraser Serviced Residencies in the region. The company will aim to develop seven gold standard serviced residences in key gateway cities in the Gulf region, which will then be managed by Fraser. The company intends to raise capital through a private placement to be announced in a few weeks.

Choe Peng Sum, Fraser’s Chief Operating Officer, said the new partnership was a step in reinforcing Fraser’s commitment and belief in the growth of the regional market. “There is a high demand for quality, serviced residences in the region, yet supply is still severely limited, providing great potential for growth for this company. Globally, the Serviced Residence sector is one of the fastest growing in the hospitality industry. Over the last five years the worldwide serviced apartment market has grown at an annual rate of 40 per cent whereas the hotel sector achieved an annual growth rate of 10 per cent,” he said.

A leading regional estate and hospitality consultancy, the Dubai-based RSP Group, will act as advisor to the new company.

Global has established five real estate companies over the past three years in Kuwait, the UAE, Qatar and Bahrain, of which one is listed on Kuwait Stock Exchange. The new company will significantly benefit from Global’s expertise and experience in setting up successful operations and achieving accelerated development of seven properties, Choe said.

He said Fraser has targeted seven properties to be developed in the next five years in the key gateway cities of Dubai, Kuwait, Abu Dhabi, Doha, Riyadh and Jeddah offering over 1,100 apartments. The first of these properties is expected to open to guests in 2008. All residences will be managed by Fraser Serviced Residences which is renowned for its globally benchmarked quality and lifestyle offerings throughout Europe and Asia.

Omar El-Quqa, Executive Vice-President of Global, said the Middle East, particularly the GCC, is passing through a vibrant economic diversification process. “We believe branded serviced apartments are an as yet untapped asset class for high investment returns. The entry of Fraser and our partnership with the leading serviced residence brand will create yet another investment opportunity for regional investors

Terming the entry of Fraser through the partnership as timely, Blair Hagkull, Managing Partner of RSP Group, said the GCC remains relatively under-represented in the serviced apartment sector. “This creates a significant opportunity, especially as the region exhibits the critical success factors such as high economic growth, a growing tourist and business travel base, a predisposition towards international brands and a large mobile expatriate population.”

El-Quqa said all key economic fundamentals were in place to fuel growth in the serviced apartments in the region. “The demand for serviced apartments is driven by three key factors — a dynamic business environment, foreign investment and population growth. The GCC countries are experiencing one of the fastest expansions worldwide in all of these areas, fuelling the new demand for quality serviced residences, a sector which is under-served in this region.”
“In the coming few weeks, Global will invite a select group of investors to participate in the private placement of the investment opportunity. The current opportunity is in line with Global’s commitment to presenting attractive investment opportunities to the investor community in the region” El-Quqa said.

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