CHINESE
Shanghai luxury hotel aims to attract more long-term tenants

IT's no secret that when international investors plan new hotel complexes, they also plan serviced apartments, residential dwellings and ground-floor retail as drawcards.

"It's not new but it's increasing and it's been happening a lot in the United States," Dransfield Hotels and Resorts managing director Dean Dransfield says.

It's also happening in Asia, with the HongKong and Shanghai Hotels group developing 39 luxury apartments next to its The Peninsula, Shanghai, hotel when it opened as the group's flagship mainland China property in 2009. The hotel and apartments overlook the former British high commission in the city's historic Bund precinct.

"It's classic best use principles," Dransfield says.

"Most of the major operators do it overseas (but) not as much in Australia. It's a nice sort of blending of a development which makes it feasible."

 Having a hotel operator within the complex makes the residential component more valuable because there is an underlying service provision.

"You have a concierge, contract cleaning, and for an upscale city dweller it's a real bonus," Dransfield says.

In Shanghai, The Peninsula Hotel originally developed 39 luxury apartments adjoining its 235 room hotel. At that stage it planned to sell them, but at this point the hotelier is renting out the dwellings on minimum two-month letting contracts.

Peninsula Hotel Shanghai managing director David Batchelor says the company is looking at developing several more projects in Asia, bringing together hotel rooms, high-end residential and upscale retail.

"It's in our thinking in terms of projects we are looking at. If we can find a project where there is the ability to have a hotel together with residences and retail that will be an attractive proposition for the company," he says.

"We are looking at a couple of projects at the moment in Asia where they have that configuration."

Back in the late 1990s, The Peninsula group was also looking to develop a hotel and residential complex at Sydney's East Circular Quay. Those plans did not proceed but it is understood that if the Hong Kong-based company could find the right city - either Sydney or Melbourne - it would be interested in developing a big hotel complex.

Meanwhile in Shanghai, Batchelor says, he is seeing a significant level of chief executive interest as well as wealthy second or third-generation mainland Chinese executives wanting to rent the 39 apartments.

They appeal to people who "have a penchant for things that are nice", he says.

The smallest two-bedroom apartments rent for $13,500 a month while a four-bedroom duplex occupying half a floor commands $68,000 a month. The complex has apartments of up to four bedrooms.

"We see tenants as being people who want a bolthole in Shanghai," Batchelor says.All apartments have triple glazing, underfloor heating, and bathrooms similar to the adjoining luxury hotel. Hotel chefs are on hand to prepare meals in the apartment kitchens.

"There's nothing like it to the level of finish that we have," Batchelor claims. "These are serviced residences connected to a luxury hotel. We have individual lift lobbies for each apartment. They are all fully furnished, but you can put you own furniture in."

There's also easy access to high-end retail stores such as Versace, Chanel, Ralph Lauren, Prada and Giorgio Armani, which are represented in the hotel.

To date no Australian executives - even though BHP Billiton, Rio Tinto, ANZ, CBA, Westpac, and Macquarie Bank are represented in China - have stayed at The Peninsula Residences.

But that could soon change.

Shanghai-based CBRE real estate executive Mark Latham deals with Australian companies planning to move into China.

"We are operating in a market that is consistently expanding," he says.

 

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