For the past decade, Tom Cheung has been a fixture at Beijing Oriental Plaza. His career at the multi-use complex began in 2001 when he became general manager of its two luxury service apartment buildings, the Tower Apartments. About five years later, Cheung’s responsibilities expanded as he took on the general manager role of the entire Chang’an Avenue complex, which includes office blocks, the Grand Hyatt Beijing, as well as a 120,000 square meter shopping mall. Cheung, who has nearly 20 years experience working in China’s real estate sector, spoke with CHINA ECONOMIC REVIEW about the state of Beijing’s serviced apartment market and the importance of promoting Tower Apartments as a lifestyle brand, rather than just a building.
Q: How would you describe the state of Beijing’s serviced apartment market?
A: In recent years, there has been a rise in high-end luxury apartments since many businesses and companies want to have an office in Beijing. Many of these companies are from other cities, or they’re multinational companies that want to set up an office. Even though a large number of high-end properties are being built in town, demand for these properties is still very strong. Also, in recent years we have found that more executives from Chinese companies like to stay in our serviced apartments because they appreciate our services, the convenience and certainly the location.
Q: What’s special about your location?
A: It’s in the center of the city and is very close to government departments; the Ministry of Commerce is just opposite. Chang’an Avenue is also accessible by various means of transportation.
Q: What kind of changes have the Tower Apartments undergone in the last 10 years?
A: In terms of the overall market, there are more serviced apartment properties in town. We have about three times the number of serviced apartment units compared to 10 years ago. Demand has been very strong, especially in 2008 when we had very high occupancy and rental rates. At one point that year, rents hit US$15,000 per month for a one-bedroom apartment and up to US$58,800 for a four-bedroom suite. Then, after the Olympics, we had the global financial crisis, and between the fourth quarter of 2008 and early 2009 there was a slowdown in leasing activities and we experienced a drop in occupancy. Since the second half of 2009, the economic environment has been improving, and business has been coming back.
Q: How has business fared after the financial downturn?
A: In terms of demand, the post-financial crisis market has been quite promising. Especially from the end of last year, we’ve seen demand pick up very fast. Not only are multinational companies sending staff back, setting up offices and expanding, but also Chinese companies – who are now more sophisticated and appreciative of good service – are sending executives from other provinces to Beijing to set up new funds and joint ventures. This is a new market for high-end apartments.
Q: What makes Beijing Oriental Plaza’s Tower Apartments stand out compared to other serviced apartments?
A: This is a big complex with 800,000 square meters of space. We have four major facilities: the hotel, apartments, the shopping mall and offices. All four functions have a synergy that our tenants can benefit from. Office tenants can use the hotel as a conference venue, and their guests can stay in the Hyatt. Office workers can shop or dine in the mall, and executive staff can stay at our apartments. Apartment tenants enjoy a discount and signing privilege at the restaurants in the hotel. Cash is not a must when you stay at our apartment. Our customers find this synergy and interconnectedness very convenient. Also, people can go from one venue to the other without going outdoors. This is particularly useful in Beijing considering the city’s extreme weather conditions.
Q: Is this also useful for marketing the complex’s lifestyle attributes?
A: It’s important that we emphasize that staying here is very convenient. The supermarket provides delivery services. In addition to the room service provided by the Grand Hyatt, we have other fine dining venues and a number of beauty salons, one of which is specialized for men. We have a six-theater cinema within the complex, where one of the James Bond films premiered in Beijing. There’s also 24-hour access to the residences’ health club, so you don’t have an excuse to not work out. This is what we see as a metropolitan lifestyle.
Q: How much does Oriental Plaza attract the local market?
A: Roughly 10% of our tenants are domestic customers. If you go back about 10 years ago, that number was much less. Most of the tenants come to us from referrals. This and returning clients have been significant for us.
Q: In the post-downturn environment, when many companies are still tightening budgets, what are you doing to retain and bring in tenants?
A: We focus a lot on service and residents appreciate this. After the recession, customers have been coming back because they don’t mind paying more for luxury service. For example, when one of our tenants lost their laptop computer, we did everything we could and found it for him. In another case, one of our tenants left her wedding ring in a taxi and did not have a taxi receipt. So we called all the taxi companies to find it. It’s cases like these where we’ve shown our personal care for customers and the lengths we’ll go to help them.