CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 BUSINESS OVERVIEW 88 89 from the current GFA of 441,650 sq ft. Subject to authorities’ approval, the Group plans to develop a Grade A office building, a residential project with over 300 apartments, commercial units at the first two storeys, and a hospitality-related component on the site. The redevelopment will rejuvenate and shape the precinct’s transformation into a vibrant lifestyle hub. INTERNATIONAL In China, Hong Leong Plaza Hongqiao, a five-tower office development in Shanghai, is 76% leased. Suzhou HLCC’s Grade A office tower is now 94% occupied while HLCC mall is 82% occupied. Following the easing of China’s prolonged zero-COVID policy, infection rates have increased significantly. It is anticipated that Q1 2023 will remain challenging for businesses before consumer confidence rebounds. In the UK, demand for best-in-class buildings remains healthy, which bodes well for the Group’s Grade A buildings in Central London. 125 Old Broad Street and Aldgate House have achieved committed occupancy of 93.9% and 98.1% respectively. In Thailand, the Phase 1 revamp of Jungceylon Shopping Center in Patong, Phuket, was unveiled on 16 December 2022 to welcome the return of both domestic and international tourists with a range of exciting new lifestyle attractions. The remaining phases are targeted to complete by the end of 2023. THE LIVING SECTOR UK The UK Private Rented Sector (PRS) has proven to be a defensive asset class across the pandemic. Despite short-term challenges such as rising construction costs, higher interest rates and an inflationary environment, structural undersupply and mortgage affordability issues are expected to drive rents upwards. Strong rental demand is evident from healthy leasing rates and occupancy across newly-launched schemes. Rising wages, especially among those in the 25 to 34 age group, also support rental growth. In Q4 2022, the Group’s first PRS project in the UK – The Junction, located in Leeds, obtained sectional completion for three out of five blocks (307 out of 665 units) and the Group recently welcomed its first batch of residents. Construction of The Octagon, the Group’s 370-unit PRS project located in the heart of Birmingham, is in progress with an estimated completion in 2025. Rents for new PRS projects launched in Leeds and Birmingham performed exceedingly well in 2022 and the Group expects its own PRS projects to similarly outperform. The Group made its initial foray into the UK’s Purpose-Built Student Accommodation (PBSA) sector in June 2022 with the acquisition of Infinity, a 505-bed PBSA asset in Coventry. In December 2022, the Group enlarged its portfolio by acquiring five additional PBSA assets for £215 million (approximately $350 million) in Birmingham, Canterbury, Coventry, Leeds and Southampton. These six assets, comprising about 2,400 beds, enjoy committed occupancy of about 98%. Japan In 2022, the Group acquired three newly-built PRS assets for ¥6.61 billion (approximately $66.9 million) – two properties in Yokohama (City Lux Tobe and LOC’s Yokohama Bayside) and one in Osaka (Gioia Namba) – totalling 271 units. The Group now owns eight operational PRS assets in Japan, comprising 513 units. The easing of border restrictions and the return of foreign nationals to Japan in 2H 2022 have significantly contributed to the recovery in the residential sector. The Group continues to enjoy stable rental income for its PRS portfolio and strong occupancies of above 95%. Australia To leverage the rising demand for rental accommodation in Australia, the Group Infinity | Coventry, UK acquired two PRS development sites in Brisbane’s Toowong riverside suburb and Melbourne’s Southbank, totalling around 490 apartments. Construction of both projects is targeted to commence in 2H 2023. HOSPITALITY With the continued recovery and restored confidence in global travel following the relaxation of travel restrictions and borders reopening, the Group’s hotels achieved a strong performance in FY 2022, registering a y-o-y revenue per available room (RevPAR) growth of 91% to $137.9 (FY 2021: $72.2). The RevPAR growth for FY 2022 is attributable to a 48.9% increase in average room rates and a 14.2 percentage points improvement in average occupancy rates across all geographies. Notably, hotels in London, Singapore and New York outperformed in 2022. The total revenue of the Group’s hotels in Asia, the UK and the US have mostly surpassed their FY 2019 respective performance from September 2022 onwards, despite the soft market conditions in Taipei, Beijing and New Zealand. Average GOP margin increased by 11.3 percentage points y-o-y and has normalised to FY 2019 levels registering a slight growth of 3 percentage points, primarily led by the UK, US and Singapore markets. With a focus on revenue generation and asset yield optimisation, the Group continues to enhance its hospitality offerings and revitalise its assets through AEIs and repositionings. In Singapore, the Group completed the renovation of all 360 guestrooms at Studio M Hotel in May 2022. Grand Copthorne Waterfront Hotel commenced its phased refurbishment in Q4 2022, for its 550 guestrooms and public areas. In the same quarter, in tandem with the ongoing AEI of the Group’s Jungceylon Shopping Center, Millennium Resort Patong Phuket started renovating its 418 guestrooms and common areas. The hotel will be rebranded as M Social Hotel Phuket – the first in OPERATIONS AND MARKET REVIEW Thailand. Completion works for both assets are expected by 2H 2023. Over in New Zealand, Copthorne Hotel Greymouth was rebranded on 1 March 2022 (previously named Kingsgate Hotel Greymouth). Millennium Buffalo Hotel in the US ceased operations in October 2022 due to a non-renewal of the lease. In 2H 2023, the Group is planning to unveil its newest hotel in Singapore, the iconic eight-storey 204-room The Singapore EDITION, located on Cuscaden Road. It is EDITION’s first hotel in Southeast Asia, a unique concept in the lifestyle hotel space conceived by Ian Schrager and Marriott International. In China, the 295-room five-star M Social Suzhou is scheduled to open in Q2 2023. Going forward, the Group has other AEIs in the pipeline for 2H 2023 / 2024. They include a major renovation for Millennium Downtown New York, which will be rebranded to M Social Hotel Downtown, New York. and the Millennium Knightsbridge London, which will be rebranded to M Social Hotel Knightsbridge, London. With its hotel operations having recovered in most markets to pre-pandemic levels in 2022, the Group can now accelerate its plans for asset optimisation, alignment to the Group’s sustainability goals and driving growth. The Group expects its hotel operations to strengthen further, riding on the reopening of China, postpandemic ‘revenge travel’ and the return of corporate travel. Southbank PRS | Melbourne, Australia Artist’s Impression
RkJQdWJsaXNoZXIy ODIwNTc=