The Ascott Limited is planning to open two more serviced apartment complexes with Raffles City in the southern cities of Hangzhou and Ningbo, Lee said, adding that "this will be a perfect way to cater to our residents' various living needs."

Ascott Limited, a major operator of upscale apartment complexes in Beijing, opened its fourth serviced residential development in the capital city Wednesday, but analysts are lukewarm on the market's prospects.

This is the first time that Ascott has cooperated with developer Raffles City, which comprises a retail mall, an office tower and a serviced residence building. Raffles City is owned by CapitaLand, the Singapore-based parent company of Ascott.

"Mixed developments such as Raffles City is another platform for Ascott to grow rapidly, and we can service our customers better via our strong network in China," said Lee Chee Koon, managing director of Ascott North Asia, Wednesday.

But analysts say the serviced apartment market as a whole does not look good this quarter, despite a slight recovery seen recently.

"The vacancy rate of serviced apartments in Beijing will be 20 percent by the end of this year because of the increase of supply and the demand drop caused by the winter off season," Zhang Hong, head of Corporate Residential Service, Beijing of Jones Lang LaSalle, a financial and professional services company specializing in real estate, said at a press release October. Demand increased slightly in the third quarter, however, as some foreign companies sent more employees to Beijing, according to the report by Jones Lang LaSalle.

But the price of serviced apartments in the same period in Beijing declined 2.2 percent over the previous quarter, falling to 172 yuan ($25.19) per square meter per month, the report said.

The recent fall in rent prices and the increase in assets sales prices has made investing in apartments a little bit riskier, Tan Xiaomei, head of Research Beijing of Jones Lang LaSalle, said Wednesday. Tan added that Ascott's capital strength and managing experience could deal with that problem.

Cai Dingzhao, regional general manager, North China of the Ascott Group, brushed off the pessimism, saying they were confident in Bejing's potential and will be able to carve out their own market share.

"The demand for serviced apartments began to increase as the economy started recovering from the financial crisis," Cai said Wednesday.

"The return period on investments in serviced apartments is at least two years, so consequently, commercial opportunities and capital strength are really important," Cai said.

And analysts confirmed the need for capital reserves if a domestic property developer wants to enter the market.

"In China, the owners and operators of the serviced apartments are always foreign companies or companies from Hong Kong or Taiwan that have loads of capital and experience," Wang Chen, head of Consulting Department of North China of DTZ, a global real estate adviser headquartered in London, said Wednesday.

"The domestic real estate developers still have not entered into this market because they lack experience and have a different target clientèle," Tan Xiaomei of Jones Lang LaSalle said Wednesday.

Source: Global Times

Editor: Lee