Singapore: GuocoLand expands to UK & AUS; Ascott expands business in Brazil

GuocoLand is expanding into the UK and US through a joint venture firm listed on the Bursa Malaysia while Ascott is expanding its serviced residences business in Brazil.

GuocoLand expands to UK & AUS with JV

SGX-listed property group GuocoLand Limited has expanded into the UK and Australia via its joint venture (JV) company, Eco World International (EWI), which currently has four development projects under construction in London and Sydney, with an estimated total gross development value of approximately £2.4 billion.

As at 31 January 2017, the total contracted sales from EWI’s four projects were approximately £1.2 billion. EWI is listed on the Bursa Malaysia. According to GuocoLand, the expansion is part of a strategic partnership with Eco World Development Group Berhad (ECB), a Bursa-listed property developer.

Both are the two largest shareholders in EWI, with stakes of 27 per cent each. EWI’s IPO was priced at RM1.20, with GuocoLand’s investment in EWI amounting to RM777.6 million. The retail offering of the IPO was oversubscribed by 8.87 times.

At the price of RM1.20 per IPO share, EWI’s IPO was the largest in Malaysia since June 2015. GuocoLand’s investment in EWI amounted to RM777.6 million (S$246 million).

GuocoLand Group President and CEO, Raymond Choong commented: “Our strategic partnership with EWB in EWI represents concrete progress on our venture into the UK and Australia, to grow our business beyond Asia. With the joint support of GuocoLand and EWB, EWI will be better positioned to grow its business in the two large and exciting markets.” 

Ascott expands into Brazil

CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has entered South America with franchise agreements for two serviced residences in São Paulo, Brazil.

Vitacon, a São Paulo-based real estate company, will franchise and operate the 92-unit Citadines VN Jardins São Paulo and 122-unit Citadines VN Faria Lima São Paulo. The two serviced residences are scheduled to open in the last quarter of this year and 2020 respectively. Ascott and Vitacon have also signed an agreement with the intent to establish a portfolio of at least 5,000 Citadines- branded units in São Paulo.

Headquartered in Brazil, Vitacon has launched 40 residential and commercial projects delivering an estimated $1 billion in sales, of which 25 projects have been completed. Vitacon also manages about 1200 furnished apartment units for lease in São Paulo, providing concierge, laundry and housekeeping services.

Lee Chee Koon, Ascott’s CEO, commented: “Ascott’s entry into South America through franchise is a significant move to expand our global network of properties, and in turn increase our fee income. We see strong potential to scale up Ascott’s presence in Brazil given its status as the powerhouse of South America, accounting for close to half of the region’s foreign direct investments.”

Brazil’s FDI reached $15.4 billion in December 2016, according to the World Investment Report 2016 by the UN. This suggests significant opportunities in the region for serviced residences, given business travel is set to grow alongside the economy.

Lee explained: “Anchoring ourselves in Brazil’s largest city, we will seek to expand our footprint to other major cities including the capital of Brasília, Rio de Janeiro and Belo Horizonte. We will also explore opportunities in new markets such as Argentina, Chile and Mexico. In the next five years, Ascott aims to achieve 10,000 units in South America.”

The strategic partnership between Vitacon and Ascott will permit further expansion, given Vitacon’s sizable land bank in prime locations across São Paulo, which is a regional financial and business hub. This is also coupled with a deficit of quality accommodation to cater to the needs of expatriates and business travellers.

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SG Dealbook: Tee International; Asia ex-Japan REIT ETF in SGX; Wee Hur property