We estimate that serviced residences (SRs) in Singapore account for approximately 9.6% of the Singapore lodging market (in terms of nights stayed), with hotels accounting for the rest. For the HK lodging market, we calculate that SRs have a 20% share and, according to The Apartment Service (TAS), SRs account for 30% of the Australian lodging market. Against both markets, we see the potential for more growth for Singapore SRs, particularly versus HK – a close hospitality peer. TAS also indicates that SRs make up 8% of the US lodging market, significantly higher than that of UK’s (2%) and Europe’s (1%). From these figures, we believe that the SR sector in Europe has significant potential for expansion. Through ART’s properties in Europe and developing Asia, which respectively accounted for 38% and 25% of its portfolio by asset value as of 30 Sep, it has good exposure to what we believe will be the longer term growth regions for the global SR industry. We maintain our fair value of S$1.37 and BUY rating on ART.
SG lodging market: 10% serviced residences, 90% hotels
We indicated on 4 Sep 2012 that the supply of serviced residence (SR) units in Singapore is estimated to grow at 5.1% p.a. for 2012-2014 to approximately 5,765 units. This is faster than the 4.8% p.a. rate at which the hotel room stock in Singapore is expected to grow at. While SRs accounted for 9.1% of the rooms and units available as of end-2011, given that their average occupancies are higher than that of hotels (91.8% versus 86.5% for 2011, STB), we estimate that SRs account for approximately 9.6% of the Singapore lodging market (in terms of nights stayed), with hotels accounting for the rest.
SG SR sector not saturated yet
We estimate that SRs have a 20% share of the HK lodging market. According to one of the largest European serviced apartment companies, The Apartment Service (TAS), SRs account for 30% of the Australian lodging market. Against both markets, we see the potential for more growth for Singapore SRs, particularly versus HK – a close hospitality peer. TAS also indicates that SRs make up 8% of the US lodging market, significantly higher than that of UK’s (2%) and Europe’s (1%). By these figures, we believe that the SR sector in Europe has significant potential for expansion.
ART exposed to the LT growth regions
Through ART’s properties in Europe and developing Asia, which respectively accounted for 38% and 25% of its portfolio by asset value as of 30 Sep, it has good exposure to what we believe will be the longer term growth regions for the global SR industry. ART has emphasized that it continues to explore opportunities in Asia as well as London, Paris and key cities in Germany. We also see Europe’s SR industry as being relatively underdeveloped compared to those of the US, HK and Australia. For instance, according to data from CBRE, the number of SR units per 1,000 annual business travelers is 1.2 in London, versus 1.8 in Singapore, 1.9 in NY, 2.6 in Sydney and 5.3 in HK.
Maintain BUY
We maintain our fair value of S$1.37 and BUY rating on ART. We believe that the FY12F DPU yield of 6.9% is very attractive.
We indicated on 4 Sep 2012 that the supply of serviced residence (SR) units in Singapore is estimated to grow at 5.1% p.a. for 2012-2014 to approximately 5,765 units. This is faster than the 4.8% p.a. rate at which the hotel room stock in Singapore is expected to grow at. While SRs accounted for 9.1% of the rooms and units available as of end-2011, given that their average occupancies are higher than that of hotels (91.8% versus 86.5% for 2011, STB), we estimate that SRs account for approximately 9.6% of the Singapore lodging market (in terms of nights stayed), with hotels accounting for the rest.
SG SR sector not saturated yet
We estimate that SRs have a 20% share of the HK lodging market. According to one of the largest European serviced apartment companies, The Apartment Service (TAS), SRs account for 30% of the Australian lodging market. Against both markets, we see the potential for more growth for Singapore SRs, particularly versus HK – a close hospitality peer. TAS also indicates that SRs make up 8% of the US lodging market, significantly higher than that of UK’s (2%) and Europe’s (1%). By these figures, we believe that the SR sector in Europe has significant potential for expansion.
ART exposed to the LT growth regions
Through ART’s properties in Europe and developing Asia, which respectively accounted for 38% and 25% of its portfolio by asset value as of 30 Sep, it has good exposure to what we believe will be the longer term growth regions for the global SR industry. ART has emphasized that it continues to explore opportunities in Asia as well as London, Paris and key cities in Germany. We also see Europe’s SR industry as being relatively underdeveloped compared to those of the US, HK and Australia. For instance, according to data from CBRE, the number of SR units per 1,000 annual business travelers is 1.2 in London, versus 1.8 in Singapore, 1.9 in NY, 2.6 in Sydney and 5.3 in HK.
Maintain BUY
We maintain our fair value of S$1.37 and BUY rating on ART. We believe that the FY12F DPU yield of 6.9% is very attractive.
No comments:
Post a Comment