Wednesday, December 23, 2009

Developers yet to warm to idea for the silver years

Most of them cite unfamiliarity and high costs as barriers

SINGAPORE’S ageing population means a growing need for greater medical care and facilities for the elderly – not least of which would be a retirement village for the more independent-minded.

The government has sought to encourage the development of a retirement community here: In February 2008, it released a land parcel in Jalan Jurong Kechil, close to the Bukit Timah Nature Reserve, with a 30-year lease, specifically for a retirement village. So far, no one has taken it up.

A quick check with some of the major property developers revealed that none were willing to venture into retirement villages. Most cited unfamiliarity and high costs as barriers to their entry.

Ong Choon Fah, executive director in Singapore and regional head of consulting for the global real estate consultant DTZ, told BT that building a retirement village isn’t a straightforward task – there are a host of issues that need to be resolved first.

Retirement villages or communities are a big business in countries such as the United States and Australia and in Europe, and include amenities such as clubhouses, swimming pools and golf courses, as well as on-site medical facilities. But developers in Singapore are less keen on the concept.

‘I think it’s something that will happen in time to come. But, in the meantime, there are some issues that need to be addressed, issues which we’ve explored with several clients who have expressed an interest in developing retirement homes on the Jalan Jurong Kechil site,’ she told BT.

‘First, there’s a question of the land. Most of our clients have expressed an interest in a freehold plot, rather than one with a use-by date.’

‘A retirement village also differs from a normal property development because it has other amenities and may need some level of medical care on site. This makes the upkeep of the entire community rather expensive – and such a concept will most likely be targeted at the higher end of the market,’ she said.

But perhaps the most important issue that needs to be addressed is the legislative one. While there are laws to govern home purchases in Singapore, there aren’t any relating to transactions in retirement communities – unlike in countries such as the US, Australia and in Europe, where there are well-established laws governing the business.

Mrs Ong says: ‘There’s the question of the business model for the retirement village. Will residents buy or rent the units? If they buy it, will they be able to sell or will away their units to their children? Will young people be able to buy? An exit strategy is very important. And there are major issues that need to be worked out to ensure a win-win outcome for all stakeholders involved.’

Property developer and former Redas (Real Estate Developers’ Association of Singapore) chief Daniel Teo is up to the challenge. He told BT: ‘I want to offer a better lifestyle to the elderly folk here, give them that companionship they need. Develop something that the ambulant can live in comfortably.’

‘But yes, there are issues that need to be worked out – laws that need to be developed. I think the government needs to take the lead in this.’

‘Perhaps I can arm-twist them into developing such legislation when I build a retirement village,’ he quips.

Mr Teo, who is the director of his family businesses Tong Eng and Hong How groups, says he has been searching for years for the perfect site – or the right building – to begin fulfilling his dream.

He says that property developers such as MCL Land, City Developments and Frasers Centrepoint have approached him to explore the idea of developing a retirement village together.

‘The problem is finding the right piece of land. I’ve lost out on several deals, despite having done a lot of legwork on them,’ he said.

He has looked at the plot of land released by the government in Jalan Jurong Kechil, in the Upper Bukit Timah area, for a private developer to build a retirement village. ‘The problem with that is that the lease (30 years) is just too short. The size of the land and its location (next to some residential housing, close to the Bukit Timah Nature Reserve) would be perfect for an idea I have for low-rise retirement housing – maybe a five-storey block here and an eight-storey block there. But the lease needs to be changed. It needs to be extended, or there needs to be an agreement that the lease can be extended, based on a certain agreed sum. Then, it would be workable.’

Mr Teo has visited various retirement villages and communities around the world to get ideas.

He recently returned from a trip to Perth, where he found his ‘dream’ retirement village in St Ives Centro – just minutes from the Subiaco Townsite and the beach. The development is part of the St Ives group, which has several retirement villages across the country. It’s designed like a Balinese resort with an indoor heated pool, spa, gymnasium, restaurant, Internet cafe, games room, a bar and a beauty salon. Importantly, the development has 24-hour care, the latest technology emergency call system and is completely surrounded by perimeter fencing for the safety of its residents.

‘This is the standard I’m interested in; this is the sort of retirement village I’m keen on developing in Singapore,’ Mr Teo says.

He told BT that he has already found ’some 20 to 30′ like-minded folk, equally keen on developing a retirement village as he is. These include doctors, lawyers, even former Nominated Members of Parliament – ’some of whom have even engaged their own consultants to draw up plans for a retirement village’, he said.

‘I hope this will be a reality in my lifetime,’ he said.

Source: Business Times, 23 Dec 2009

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