Aiming to invest USD500 million in the coming five years, Global Investment House of Kuwait & Fraser Serviced Residences announce a Middle Eastern hospitality holding company

Under this landmark partnership, the company will have an exclusive right to develop and own Fraser Serviced Residencies in the region. The company will aim to develop seven gold standard serviced residences in key gateway cities in the Gulf region, which will then be managed by Fraser. The company intends to raise capital through a private placement to be announced in a few weeks.

The new company based in Kuwait City will focus exclusively on the serviced residence sector in the Middle East. The leading regional estate and hospitality consultancy, the Dubai-based RSP Group, will act as the hospitality advisor to the company.

Global, having established several new companies to capitalise opportunities in the regional market, has yet again, set up the company to capture a significant opportunity for luxury serviced residences in the Middle East and has joined hands with Fraser, one of the world's leading dedicated serviced residence operators, in order to manage the company's planned serviced residencies. In the last three years, Global has successfully established five real estate companies in Kuwait, UAE, Qatar and Bahrain, of which one is listed on Kuwait Stock Exchange. The Company will significantly benefit from Global's expertise and experience in setting up successful operations and achieving accelerated development of seven properties.

Elaborating on the details of Fraser's plan for the Middle East, Mr. Choe Peng Sum, Fraser's Chief Operating Officer, said: "the Middle East, and particularly the Gulf Cooperation Council (GCC) countries, offer tremendous potential in the branded serviced residence sector. Fraser earlier announced our intention to play a leading role in this market and the partnership is yet another step in reinforcing our commitment and belief in the growth potential of the regional market." he elaborated. "There is a high level of demand for high quality, serviced residences within the region, yet supply is still severely limited, providing great potential for growth for this company. Globally, the Serviced Residence sector is one of the fastest growing in the hospitality industry. Over the last five years the worldwide serviced apartment market has grown at an annual rate of 40 per cent whereas the hotel sector achieved an annual growth rate of 10 per cent."

Mr. Choe said Fraser has targeted seven properties to be developed in the next five years in the key gateway cities of Dubai, Kuwait, Abu Dhabi, Doha, Riyadh and Jeddah offering over 1,100 apartments. The first of these properties is expected to open to guests in 2008. All residences will be managed by Fraser Serviced Residences which is renowned for its globally benchmarked quality and lifestyle offerings throughout Europe and Asia.

Commenting on the partnership and outlook for serviced apartments as a potential investment opportunity to maximise returns, Mr. Omar El-Quqa, Executive Vice President of Global said: "The Middle East, particularly the GCC, is passing through a vibrant economic diversification process and we believe branded serviced apartments are an as yet untapped asset class for high investment returns. The entry of Fraser and our partnership with the leading serviced residence brand will create yet another investment opportunity for regional investors"

"Thanks to the surging economic growth fuelled by various factors including high liquidity in the market, the GCC offers one of the best opportunities worldwide in branded serviced residences. The sector represents a highly profitable investment opportunity for investors who are looking for a branded product which provides key international brand recognition, dedicated operators and strong financial results," Mr. El-Quqa said.

Terming the entry of Fraser through the partnership as timely, Mr. Blair Hagkull, Managing Partner of RSP Group said: "The Middle East and specifically the GCC, remains relatively underrepresented in the serviced apartment sector. This creates a significant opportunity, especially as the region exhibits the critical success factors such as high economic growth, a growing tourist and business travel base, a predisposition towards international brands and a large mobile expatriate population."

"With less than 1 per cent of the total hospitality supply represented by the serviced apartment sector in the region, and less than 5 per cent of serviced apartments in the GCC being branded, it definitely presents a big growth opportunity," he said.

He said that the high rate of business growth in the region coupled with increasing corporate business travel, historic levels of investment from both government and private sector and a vibrant tourism sector will catalyse the demand for serviced apartments.

Elaborating on the appeal of Service Residences Mr Choe noted: "Serviced residences 'bridge' the niche between residential apartments and hotels. They hold widespread appeal, to business people and GCC families alike, with respect to quality of finish and design, convenience and a wide range of services. With companies throughout the Middle East looking to simplify and centralize their housing function, serviced residences provide an attractive and viable option to residential rental accommodation and hotel long stays,"

Mr. El-Quqa said all key economic fundamentals were in place to fuel growth in the serviced apartments in the region. "The demand for serviced apartments is driven by three key factors - a dynamic business environment, foreign investment and population growth. The GCC countries are experiencing one of the fastest expansions worldwide in all of these areas, fuelling the new demand for quality serviced residences, a sector which is underserved in this region."

"In the coming few weeks, Global will invite a select group of investors to participate in the private placement of the investment opportunity. The current opportunity is in line with Global's commitment to presenting attractive investment opportunities to the investor community in the region" Mr. El-Quqa said.