recorded strong performance with an ARR of $354.9 and a high occupancy of 89.5%, resulting in a 16.5% increase in RevPAR compared to FY 2022. Aligned with the Group’s strategy to actively drive growth and expand its footprint in key gateway cities, the Group made three hotel acquisitions in FY 2023. In March 2023, the Group, through its wholly-owned subsidiary Millennium & Copthorne Hotels Limited (M&C) and in a 50:50 JV with its NZ-listed subsidiary Millennium & Copthorne Hotels New Zealand Limited, entered into a Purchase Sale Agreement and Business Asset Sale Agreement to acquire the 416-key 5-star Sofitel Brisbane Central hotel for A$177.7 million (approximately $159.2 million). The acquisition was completed in December 2023. Additionally, the Group acquired the 408-room Nine Tree Premier Hotel Myeongdong II, Seoul in July 2023. The hotel demonstrated strong performance with occupancy of 89.3% from August to December 2023 and its RevPAR was 29% higher than the same period in FY 2022. Over at Japan, driven by the robust recovery of its tourism industry, the newly acquired 256-room Bespoke Hotel Osaka Shinsaibashi achieved an occupancy of 91.0% and a remarkable GOP margin of 58.5% since its acquisition in August 2023. With an emphasis on revenue generation and maximising asset yield, the Group continues to expand its footprint and improve its hospitality offerings through new build properties in key cities and by revitalising its assets through AEIs and repositioning efforts. In 2023, the Group marked several hotel openings in China, Thailand and Singapore. The 294-room five-star M Social Suzhou opened in April 2023. Marking the Group’s first M Social property in China, the hotel is located in HLCC within SIP. The former Millennium Resort Patong Phuket has completed Phase 1 of its AEI and has been reflagged as M Social Phuket since November 2023. Phase 2 has commenced and the 418-room hotel is expected to fully open in 1H 2024. OPERATIONS AND MARKET REVIEW In November 2023, the 204-room The Singapore EDITION hotel soft opened, marking the first EDITION property in Singapore and Southeast Asia. Located along Orchard Boulevard, the 6-storey boutique hotel includes a curated collection of restaurants and bars, a signature spa and a rooftop pool. Millennium Downtown New York is scheduled to commence a major US$43 million ($56.9 million) AEI in 2H 2024. The 569-key hotel will be reflagged as M Social Downtown New York. The Group will also invest about US$115 million (approximately $152.2 million) to build M Social Sunnyvale in California, US. Foundation work commenced in December 2023. This 263-room hotel is expected to fully open in 2H 2026. The 222-room Millennium Hotel London Knightsbridge will also undergo a major AEI in 2H 2024 and be reflagged as M Social Knightsbridge, the Group’s first M Social in the UK. Both hotels will continue to operate throughout the AEI periods and refurbishments are expected to complete in 1H 2025. On the back of the recovery in global tourism, the hospitality segment expects to continue trading positively for FY 2024. The recent announcement of a visa-free agreement for Chinese tourists to visit Singapore, Malaysia and Thailand will further boost the hospitality market in these countries. FUND MANAGEMENT The Group is actively pursuing its fund management growth strategy through organic and inorganic growth. The Group also owns a sizeable UK commercial portfolio and an enlarged Japan PRS portfolio across Tokyo, Osaka and Yokohama, generating stable recurring income. This expanded portfolio provides the Group with the flexibility to inject these assets into listed or unlisted platforms to drive AUM growth. STRATEGIC PORTFOLIO RECALIBRATION Despite the ongoing macroeconomic challenges and uncertainties in the new year, the Group is cautiously optimistic that business conditions will improve, especially if interest rates trend down progressively in the later part of 2024. Looking ahead, the Group will continue to execute on its GET Strategy, taking a prudent approach with new acquisitions while identifying suitable divestments to recycle capital. The Group will enhance its operational efficiencies, pursue its fund management aspirations and drive value extraction to better navigate the changing landscape of the real estate sector. M Social Phuket I Thailand In Central London, demand for well-located Grade A office space is expected to strengthen. With limited new supply beyond 2025, occupier demand is expected to drive healthy rental growth for the rest of 2024. THE LIVING SECTOR UK The Private Rented Sector (PRS) in UK remained buoyant due to several factors, such as structural demand and supply imbalances and demographic and lifestyle shifts. Sub-sectors such as build-to-rent, co-living and student accommodation have demonstrated resilient rental growth and defensive qualities, providing stability and opportunities for investors. The Junction, the Group’s first PRS project in the UK, achieved full practical completion in Q4 2023, providing 665 build-to-rent apartments across five towers and 24,000 sq ft of commercial space within the site’s attractive heritage arches beneath a viaduct. Construction of The Octagon, a 370-unit PRS project located in the heart of Birmingham is in progress, and expected to complete by 2025. The Group maintains a positive outlook on the sector and has continued to expand its global living sector portfolio. In November 2023, the Group acquired 1NQ, a forward-funding PRS development in Manchester, for £75.6 million (approximately $125.7 million). The 261-unit freehold project is in the Northern Quarter and is expected to complete by 2026. The Group also completed the acquisition of the 56,500 sqm Morden Wharf development in the Royal Borough of Greenwich with its JV partner for £76.8 million (approximately $129.6 million). The proposed scheme will comprise 12 blocks of up to 36 storeys, with around 1,500 residential units as well as commercial and retail space. In February 2024, the Group acquired Yardhouse, its first PRS development in Central London for £88.0 million (approximately $148.6 million). The 250-year leasehold site will be developed into a 17-storey apartment with 209 coliving units with a gross floor area of 102,600 sq ft. The Group will forward-fund this PRS project, which is expected to complete in 2026. For its 2,368-bed Purpose-Built Student Accommodation (PBSA) portfolio across six properties, the Group took proactive steps to mitigate costs by improving operational efficiency and hedging the portfolio's utility contracts. The portfolio achieved occupancy of 97% for the Academic Year 2023/2024. Japan In September 2023, the Group invested in a portfolio of 25 quality residential assets in Tokyo’s rental housing market. The Group also invested in four residential assets in Osaka, with two pending sale completions. With these investments, the Group's total PRS portfolio in Japan now comprises 38 assets (including three in the development pipeline), yielding a total of 2,101 units. The operational assets have an average occupancy rate of around 95% and stable income. Japan’s PRS market continues to exhibit strong appeal, fuelled by a recovering economy, rising wages and a resurgence in net migration, boosting rental demand in key cities. Australia The Group has two PRS developments in the pipeline, comprising a total of 563 units. Construction started in Q3 2023 for its Southbank project in Melbourne, while its Toowong development in Brisbane is targeted to commence construction in 1H 2024. HOSPITALITY Due to the ongoing recovery and renewed confidence in global travel spurred by the easing of travel restrictions and the reopening of borders, the Group’s hotels achieved stellar performance in FY 2023. Global RevPAR for the Group’s hotels grew 25.3% to $168.7 for FY 2023 (FY 2022: $134.6), exceeding 2019’s pre-pandemic levels by 22.0%, primarily fuelled by strong average room rate (ARR) growth. All regions reflected positive trends and recorded extraordinary RevPAR growth year-on-year (y-o-y), especially Asia and Australasia. In Singapore, the Group’s hotels experienced a 19.9% increase in RevPAR y-o-y, boosted by higher room rates and strong trading volume during the Formula 1 Singapore Grand Prix in September 2023. For the Rest of Asia region, the hotels experienced a surge in occupancy throughout FY 2023, following the lifting of travel restrictions in key markets in Q4 2022. In Australasia, the Group’s hotels showed a significant improvement of 57.3% as compared to FY 2022 due to higher occupancy and ARR. In Europe, the Group’s hotels maintained strong momentum in FY 2023, achieving RevPAR of $193.1, which is 10.5% and 45.0% higher than FY 2022 and FY 2019 respectively. The Biltmore Mayfair and Grand Hotel Palace Rome led the region in RevPAR growth with over 20% increase in RevPAR compared to the previous year. The Group’s US hotels performed exceptionally as well, achieving a RevPAR of $203.1, which was 22.0% higher than FY 2022 and 20.7% above FY 2019. New York hotels 1NQ I UK Artist’s Impression BUSINESS OVERVIEW ANNUAL REPORT 2023 99 98 BUSINESS OVERVIEW CITY DEVELOPMENTS LIMITED
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