REAL estate company Far East Orchard : O10 0% has posted a 67.9 per cent year-on-year jump in net profit to S$4.7 million for the first quarter of 2023, on the back of a recovering hospitality sector.

Its revenue grew 55.2 per cent to S$46.1 million compared to a year ago, said the company in a business update on Friday (May 5) via a bourse filing.

The hospitality business was hit by the Omicron variant of the coronavirus outbreak and the reintroduction of travel restrictions in several countries in FY2022. The borders of Australia and Singapore, in particular, were opened only at the end of February and on Apr 1, 2022, respectively.

However, the group’s purpose-built student accommodation business has continued to deliver stable recurring income. 

Alan Tang, chief executive officer of Far East Orchard, said: “Riding on the global travel recovery, our first-quarter result surpassed that for Q1 FY22. The improved operating performance is a result of our clear strategies to deliver unique experiences to achieve higher average daily rates and manage costs in a rising cost environment, while positioning ourselves to recapture travel demands when it fully returns.”

Far East Orchard expects the hospitality sector to continue on its path of recovery towards pre-Covid levels.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

The company opened four hotels, offering more than 500 rooms, in Q1 2023; it is expecting to open two more hotels – one in Australia, and the other in Malaysia – in the second half of the year.

The company’s business update added: “Nonetheless, we remain cautiously confident of the positive recovery momentum, which will be dependent on the extent of the economic slowdown, the evolution of geopolitical tensions, labour availability and flight capacity.”

Far East Orchard said that the outlook for the purpose-built student accommodation sector in the United Kingdom remains strong, with demand underpinned by demographic growth, high application rates and a rising number of international students.

Despite unprecedented demand for student accommodation, the rising cost of living, inflation and interest rates will pose a challenge.

But the group said it takes a positive long-term outlook on the sector and will continue with active asset management to drive the performance of its assets, which includes leveraging on the strong rental demand and adopting cost-management strategies.

Shares of Far East Orchard closed flat on Friday at S$1.05.