Far East Orchard primes platform for scalable returns

SINGAPORE – Far East Orchard's five-year strategy launched in 2020 has bolstered its lodging platform, now comprising not only a balanced mix between hospitality and purpose-built student accommodation, but new capabilities that could be impactful for both business pillars.

The moves the Singapore-listed company made last year, specifically acquiring a 49% stake in Homes for Students, a leading U.K. operator managing over 50,000 beds, and launching an inaugural fund focusing on developing student accommodation in the U.K., are “pivotal” milestones, said Executive Director and Group CEO Alan Tang in an interview with Hotel Investment Today.

For one, the fund puts Far East Orchard “in a good place for another area of growth,” i.e. the business of fund management anchored on either hospitality or student accommodation. It adds a “capital stack” to the company's track record on development, investment and management, he said.

A hospitality fund is possibly next. “I’m quite ready and open to look at a Japan fund. We have [hotel] assets in Japan that we could use to seed and grow a [core] fund,” Tang said.

Far East Orchard CEO Alan Tang

The hotel arm, Far East Hospitality, entered Japan in 2020 and now operates five hotels in the market, three of which are management contracts. The properties, which carry the Far East Village brand, are located in Tokyo, Osaka and Yokohama.

As of June 30, hospitality accounts for 43% of Far East Orchard’s assets worth S$2.7 billion ($2.1 billion), while student accommodation, 33%. The former’s revenue contribution to the company is 61% while the latter, 33%.

Far East Hospitality, together with joint venture partner Toga Far East Hotels, manages more than 100 properties (around 10 owned) with 17,500 rooms across 10 brands. Most of the hotels are located in Australia/New Zealand, Singapore and Germany.

In the pipeline are 200 rooms slated to open this year, proving the five-year strategy’s target for the subsidiary to hit 25,000 hotel rooms by 2025 is over-ambitious.

Student housing, on the other hand, is an over-achiever. With the Homes for Students acquisition, Far East Orchard now owns and manages around 55,000 beds, including its own portfolio of 13 assets across seven U.K. cities, and three assets in pipeline in Bristol, Glasgow and Manchester, or nearly 5,000 beds.

A tale of two segments

The group is finalizing its next five-year strategy, which will focus on scaling the two business pillars.

In this, it has new leaders. At Far East Hospitality, long-serving CEO Arthur Kiong is retiring in April 2026 and will be succeeded by the current COO Mark Rohner, who joined Far East Hospitality in July 2024.

A managing director for the student accommodation business, Yang Zejian, has also been appointed to lead the growth of the portfolio in the U.K. and other strategic markets, while driving operational and service excellence.

The U.K. will remain the core student housing market for Far East Orchard, Tang said. “We’re only scratching the surface with our own portfolio of 5,000 beds [excluding the 50,000 beds from Home for Students]. There’s still a long drive to take due to the depth of the U.K. market and its persistent shortage of student accommodation.

“With Home for Students under our belt, we’re building a lot more expertise in the U.K. We plan to leverage their established presence to drive further growth there. Plus, they have began to expand in Europe, which may provide us with a better understanding of the European market and potential opportunities for our own growth.”

Moreover, only 36% of the first fund, which closed in June with £96 million ($131 million) from institutional investors and the group, has been invested. This was deployed into the purpose-built student accommodation in Glasgow and Manchester, which are expected to be completed in 2026 and 2028, respectively.

According to Tang, in general, investors expect a development fund such as the U.K. purpose-built student accommodation to generate a double-digit return due to development risk. With a core fund, they may accept a high single-digit return as the asset has been completed.

We are always open to inorganic growth via M&As, but it’s not easy to find a suitable candidate. We have a good partnership with TFE (Toga Far East joint venture], now in its 12th year, and I’m looking at a smaller M&A within a country where we could grow Far East Hospitality further.

Alan Tang

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When asked about risks such as potential visa changes that could affect demand in the U.K., Tang said, “That could happen across all countries, not just the U.K. It’s political – when it comes to competition for land, which do you build first, housing for the people or student accommodation? At the same time, the universities need international students, who pay higher fees, to help fund [their operations].”

More ‘villages’ in Japan

While the U.K. remains the core market for student accommodation, the hospitality business will be “doubling down on Japan in a big way,” Tang said.

Far East Hospitality will stick to the mid-market segment and raise its Far East Village flag further in Japan, as the brand has been well-received by both domestic and international travelers in Japan, according to Tang.

The brand encourages guests to go local with efforts such as its signature Village Passport, a curated insider guide to local attractions, dining and other experiences around the hotel location.

Tang isn’t disappointed about Far East Hospitality missing its target of 25,000 rooms in 2025 by a long stretch, saying the goal remains an aspiration.

He is open to acquisitions to grow the business further.

“Post-COVID, growth via asset-light management contracts hasn’t been easy because developers face a lot more inflationary pressure and many projects are delayed. The landscape has become more competitive.

“Having said that, we’ve never been looking unilaterally at organic growth. We are always open to inorganic growth via M&As, but it’s not easy to find a suitable candidate. We have a good partnership with TFE (Toga Far East joint venture], now in its 12th year, and I’m looking at a smaller M&A within a country where we could grow Far East Hospitality further,” Tangsaid.

On the question which of the two business segments is more resilient, Tang laughs, saying COVID-19 was the best test case as the crisis clearly showed student accommodation as being more resilient than hospitality.

“When there’s no travel, there’s no business to talk about,” Tang said. “It’s a major test of the complementary aspect of the two sectors. It gave us the added confidence of diversifying the lodging platform via a balanced portfolio of these business pillars.”