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Villages the aged could retire to
According to the Department of Statistics, about 7.5% of our population or 2.2 million people will be aged 65 and above in 2020. Last year, there were more elderly women than men, mostly widows, and the Chinese made up the highest number of individuals aged above 60 — at 9% — compared with the Malays at 6% and Indians at 7%. Come 2020, the gap between the groups is expected to be even wider, with the Chinese at 14%, Malays at 8% and Indians at 10%.
The fact is we have an ageing population whose needs, including housing, cannot be ignored.
Datuk Michael Yam, president of the Real Estate and Housing Developers’ Association Malaysia (Rehda), believes demand for homes for the elderly among the middle class could gain traction. However, these homes need to be rebranded to attract the affluent who are accustomed to a certain lifestyle.
In more developed countries such as Australia, the affluent elderly can choose to own a home in a development that caters for senior citizens.
In Malaysia, there appears to be latent demand for such “retirement homes” but due to cultural reasons and no clear successful model, most property developers steer clear of such specialised housing, citing lack of sufficient demand. Nor is there enough expertise to manage or offer services for the independent elderly or for those requiring aged care.
Instead, developers offer “inter-generational homes” that, for instance, come with two master bedrooms, dual entrances and are close to established medical care centres in the neighbourhood.
However, some are tapping the opportunities in the growing number of elderly in the country.
Healthcare provider KPJ Healthcare plans to set up retirement homes near its hospitals within the next five years. Its subsidiary Kumpulan Perubatan Johor has acquired a 21% equity interest in Australia-based Jeta Gardens Waterford Trust (JGWT), which owns and operates a retirement village in Brisbane, and extended the deadline to increase its stake to 51% to September for a total consideration of RM19 million. The assets of JGWT will be injected into KPJ’s associate company Al-’Aqar KPJ REIT for RM135 million.
JGWT owns an Asian-themed retirement resort called Jeta Gardens, which houses an aged care facility, retirement homes and apartments in Bethania, Queensland. Its unaudited net profit before tax was A$4.4 million in FY2011 ended June 30.
Tan Choe Lam, founder of Jeta Gardens, says the acquisition by KPJ Healthcare allows him to scale up faster and focus on managing the operations. The Malaysian-born engineer had migrated to Australia in the 1980s. His interest in aged care came about after looking after his sick father and observing that in Australia, there was no retirement facility specifically for Asians who, he believes, have their own needs — from dietary preferences to funeral arrangements. So he started the 34-acre retirement village in 2006. Jeta Gardens has a lake and a sprawling oriental-themed garden and its facilities include a 108-bed high-care and low-care aged care facility with a dementia wing and resort-style villas and apartments for more independent residents for lease that are fully occupied.
Besides KPJ, Malaysia Pacific Corp Bhd (MPC) has announced the development of Platinum Residence in Iskandar Malaysia, Johor. Touted as luxury retirement homes for “active retirement”, the project comes with 24-hour room service and nursing care. It is aimed at Malaysia My Second Home (MM2H) participants and elderly Singaporeans, says MPC CEO Datuk Bill Ch’ng.
It is also learnt that Sime Darby Property may have plans to set up a retirement care facility in its Vision Valley.
Joseph Chong, former managing director of Malton Bhd, believes it is the right time to build homes for the elderly in Malaysia. “It is a question of how well you do it,” he says. For instance, silver-haired participants of the MM2H programme may need help familiarising themselves with the country and staying in a retirement village, complete with assistance, would help them assimilate faster.
Chong, who is currently in discussion with several landowners in the Klang Valley, plans to develop an integrated retirement housing project — either a condominium of 100 to 200 units of about 1,000 sq ft each in the urban areas or a retirement village with landed homes in a suburban area.
He says areas in Saujana, Valencia and Desa ParkCity make ideal locations for these projects as they are surrounded by greenery and amenities are within walking distance.
It is worth noting that the low-density Mont’Kiara Sophia condominium in Mont’Kiara, Kuala Lumpur, which was completed in 1997, was first conceived as an active retirement home of sorts as it was designed to be senior citizen-friendly. However, say observers, that idea was ahead of its time.
Datuk Alan Tong, who was then the owner of Sunrise Bhd, the condo’s developer, declined to comment on whether such a project is viable now. Yam, who was the managing director of Sunrise then, believes the market will not accept the retirement village/home concept unless the label “retirement” is dropped.
He adds, “In the Klang Valley, there is already an ample supply of condominiums that offer lifestyle amenities and in Mont’Kiara, basic medical facilities are available around the corner. An ambulance is parked in some condominiums.”
Chong, however, points out that most residents still have to move around on their own while not everyone wants or can afford to live in a more than 1,000 sq ft unit.
The Australian model
There are two types of retirement care homes: senior active retirement homes or independent living units equipped with emergency facilities for the independent elderly who want to live in a community; and assisted living, nursing care or aged care homes, which are more common in Malaysia.
The former is popular among developers in the West as it does not come with the burden of providing comprehensive medical facilities. In Australia, the two market leaders — FKP Property Group and Stockland — reported an operating profit from the sale and management of retirement-living properties of more than A$180 million collectively in FY2011. FKP, an associate company of Malaysian-listed Mulpha International — its single largest shareholder — is one of the largest operators of retirement real estate in Australia.
It expanded mainly via acquisitions and owns and manages about 80 retirement villages in the country now with an underlying property value of A$1.9 billion as at June 30, 2011. However, FKP’s retirement villages do not focus on high-level care, unlike Jeta Gardens, which offers both retirement living and high-care services. (see story above on Aveo Mingarra)
FKP’s retirement division posted a lower operating profit of A$119 million in FY2009 ended June 30 compared with A$126 million in FY2008 due to a drop in the number of new developments and slower residential market. This weaker sentiment extended into FY2010, when the division posted an operating profit of A$116 million. A slow and illiquid residential market impacted the ability of many residents to sell their homes and fund the purchase of a retirement property. But the division rebounded in FY2011 with an operating profit of A$126 million.
Stockland, which was FKP’s second largest shareholder as at June 30, 2011, manages 59 villages comprising 7,535 units across Queensland and Victoria, some with easy access to golf courses. Value of assets are estimated to worth A$698 million as at end FY2011. Operating profit in FY2011 was A$53 million or about 7% of total profit.
From 1998 to 2008, Stockland estimates the value of units at its retirement villages rose by an average of 6% a year.
‘Singapore a ripe market’
Meanwhile, Daniel Teo, a Singaporean architect, entrepreneur and long-time advocate of retirement homes, says he is in discussion with several property developers and potential sites have been identified in Malaysia.
“Singapore is a ripe market as the population is the second most aged nation after Japan. By 2030, one in five Singaporeans will be aged 60 and above. Singaporeans can withdraw from their Central Provident Fund to pay for nursing care services provided by not-for-profit institutions with Institute of Public Character status, but it is difficult to start retirement homes in the city-state due to high land cost and planning restrictions,” he explains.
Johor could be a good choice due to its proximity but security and red tape could be a challenge, he adds.
The state could be a retirement destination for elderly Singaporeans, as research by Jack Tan, Choe Lam’s son and executive director of Jeta Care Sdn Bhd, shows. “Giving a ballpark figure, about 20% of the residents in nursing homes in Johor are Singaporeans. But the nursing homes are depressing,” says Jack.
Jeta Care has invested about RM4 million in converting a family-owned commercial complex into a retirement care home in Kulai, Johor, based on Australian care standards of hygiene and safety. Offering low to high ex-dementia care, the 90-bed facility with a rooftop garden, space for social activities and even a hairdressing salon on the ground floor will be managed by Jeta Care and is scheduled to open in December. There will be single, twin and bigger rooms.
Tan is confident of attracting Singaporeans. While retirement care homes in Singapore may have good facilities, they look too clinical and on average could cost the client S$2,000 to S$3,000 a month, putting such homes out of the reach of the average Singaporean wage earner. Tan says the fee for the Kulai home will be around RM1,500 a month for low care and RM3,000 for high care.
Choe Lam’s former business partner at Jeta Care, Richard Lim — also a Malaysian émigré to Australia — is working with an Ipoh-based property developer to launch a 13- acre retirement village in Meru, Ipoh, in six to eight months’ time. Lim, managing director of Skylight Lifestyles Group, a retirement and aged care consultancy group, says the aim is to position Ipoh as an upmarket retirement destination for KLites and MM2H participants.
This project will consist of 1,200 to 1,300 sq ft semi-detached homes, 800 sq ft terraced homes, 450 to 600 sq ft apartments as well as a nursing home with 120 single en suite bedrooms of about 260 to 280 sq ft. Each unit will be equipped with a no-motion sensor, man-fall and gas leak detection systems and emergency call alarms. There will be a clubhouse with dining options, a business centre, gym, wellness centre, mahjong rooms, prayer room and karaoke room.
Owners make payments as the development progresses, akin to buying a normal leasehold property, and when they move in, they have to pay a monthly service charge. When they move out, they can sell the lease to the next resident at a valuation determined professionally. Although the selling price has not been fixed, Lim estimates the apartments to cost up to RM155,000, the terraced homes up to RM210,000 and the semidees up to RM370,000.
A boutique medical group, also advised by Lim, has submitted a proposal to the Penang government to build a high-quality retirement care facility in the city.
Aveo Mingarra
Overlooking the beautiful Dandenong Ranges is Aveo Mingarra, located in Croydon, a 40-minute drive from Melbourne and the Yarra Valley, a popular tourism spot. Aveo Mingarra was started by a church and managed by Aveo Live Well, a major operator of retirement homes. It is now owned by FKP Property Group, and offers low to high-aged care facilities.
Aveo Mingarra is 100% occupied. There are 99 independent living units, each about 600 sq ft, comprising one or two bedrooms, with or without a study area, and equipped with a complete kitchen and garage space. Price ranges from A$110,000 to A$570,000. Another 70 units will be built over the next two to five years.
According to an FKP spokesperson, many of the original residents have lived here since 1998 and are mainly from Croydon and nearby towns. The place is often lively with activity as residents get together to make handicraft, play bingo, watch movies, play snooker, and have parties during the festive season. Every other Tuesday is movie day while every other Friday night is pizza night.
Once a week, there is a water aerobics session. Residents can also work on the garden or visit the library. Aveo Migarra also offers a hair salon, heated swimming pool, gym, games room and golf simulator. Maintenance services are taken care of. If the plumbing breaks down, residents can press a direct dial button that connects them to a local plumber in the village. For security, residents wear an emergency wristband or pendant with a panic button while a doctor comes in on Wednesdays to meet patients.
The average price of a unit with two bedrooms and a study is A$420,000 while those with a view could go for A$500,000. The spokesperson says it is not a matter of persuading clients but showing them how Aveo Mingarra can change and help manage their lifestyle better. Due to its accessibility to a supermarket and public transport, residents do not feel they have lost their independence.
An 87-year-old American, Agnes Rocks, who has been living in Aveo Mingarra for more than two years was attracted to the place after seeing the view and meeting the people. She said, “When I got my residency in Australia, I decided to get a place here and not to go back. Social life here is fantastic and everybody is so friendly.” The Californian decided to move to Melbourne, where her sister lives, after her husband passed away. She was a teacher, and had taught children of movie stars in Beverly Hills as well as stars like Paris Hilton when she was eight years old. She adds, “It’s very secure here. There are no security guards. People here keep a look out for each other.”
Australian Lanore Macdonald, 71, looked at 26 villages in Melbourne before deciding on Aveo Mingarra. “We didn’t think we would move into a retirement home so soon but when we saw this place, we thought what were we waiting for? You’re able to use the facilities now when you can. We are very spoilt here,” she says. “It’s also close to the church and where my grandchildren live,” she adds.
It’s all about convenience for Macdonald. “Ten years ago, I used to walk across the roof of our home to inspect it but I won’t do it now. Staying here, you don’t have to go through the yellow pages to find services,” she says.
Sri Seronok Retirement Village
Sri Seronok, a retirement village without aged care in Cheras, Kuala Lumpur, appears to have found its niche among middle-class clients through word of mouth. Owned by the Catholic Archdiocese of Kuala Lumpur and opened in 1999, Sri Seronok is located on two acres of land in Taman Sri Bahtera, Cheras. It comprises a collection of 30-plus single-storey, 650 sq ft independent living units with a bedroom, kitchen and dining area. The property is managed by a small team comprising a property manager, gardener, maintenance staff, part-time cleaner and security guards. The fact that it is located across a cemetery does not seem to bother the residents, perhaps because there are tall hedges blocking the view. It is fully occupied except for one or two units left vacant for visiting relatives, and in 2010, only six residents moved out. There are 35 people on the waiting list.
The residents are mainly widows in their 80s who relocated from nearby towns like Seremban, Port Dickson and Ipoh to be closer to their children who work in the Klang Valley. While it is owned by a church, the residents are a mixed group of Christians and Buddhists.
Sri Seronok’s manager Kathy Revi says, “As residents grow older, they lose a bit of their agility, hearing and then eyesight. One thing that’s left is their dignity, which is why we treat them with upmost respect.”
It is a congenial environment here. “When someone moves in, within half an hour, the residents will be welcoming the person and bringing a dish of what they had cooked. Residents generally try to help one another. One of our younger residents, who is 58 years old, accompanies the residents to the hospital for their check-up,” says Revi. “This is home to them.”
Some residents have a helper or caregiver living with them. The nearest hospital is Hospital UKM, but residents can indicate their hospital preference when they move in. Certain safety features are incorporated. For example, the homes are arranged in a horseshoe shape and doors can be opened wide to move residents out during an emergency, also the ambulance or car can drive up to any of the homes. The grassy area is on top of locked bricks so that in the event of a heavy rain, it does not get muddy.
A Chinese-Eurasian couple in their 80s who have been living here for four years tell The Edge that they chose Sri Seronok because it is located next to a church; they feel safe here, and it is easier to upkeep a smaller home than their former home in Petaling Jaya. The family had sent the husband who had suffered a stroke to a nursing home for a short period of time, but he was unhappy with the conditions. The couple does not appear to be lonely, keeping themselves busy with crossword puzzles, reading and talking to other residents. The wife says her children, who live in Petaling Jaya, visit them frequently to provide home-cooked food (two other children reside abroad).
Revi says, “We interview prospective residents on why they want to move in here and not live with their children. We turn away clients who are forced by their children to live here.”
At Sri Seronok, residents pay a monthly rent of RM750 (RM800 from April onwards) with no ownership rights, and that seems to work well for them. Some residents give post-dated cheques or pay upfront for the year.
Demand from MM2H participants and expatriates
Narelle McMurtrie, an Australian who has lived in Malaysia for over 20 years, is the founder of Straits Collection, which owns hospitality assets like Bon Ton Resort. She believes the retirement home concept could work in vacation spots such as Langkawi for participants of MM2H. “Malaysian companies have come to Langkawi to look at the idea but have never gone ahead due to the lack of hospital support,” she says.
Andy Davison, publisher of The Expat magazine, echoes her views, adding that Iskandar Malaysia in Johor would be ideal for older Singaporeans. Melaka, Ipoh and Sabah are other potentially popular retirement spots for expatriates.
In terms of pricing, Davison takes a more pragmatic view. “In the early stages, the starting price should be as low as possible. Income for the management would come from monthly resident charges. The developer could sell or lease the units, or sell them like club memberships,” he suggests.
James Pitchon, executive director of CB Richard Ellis (CBRE) in Thailand, says Malaysia has the best legal package for foreigners in terms of property purchases and in obtaining a visa, but it appears that Thailand has been more successful at attracting numbers.
Numbers from CBRE Thailand and Malaysia’s Tourism Ministry show that Thailand registered 27,000 retirement visas, compared with 13,000 for Malaysia, in 2009. Pitchon says it comes down to product offering and positioning — Thailand has for a long time been known for its exotic beaches and idyllic villages, and the market proved resilient when tourist numbers rebounded quickly after the civil unrests in Bangkok in 2010.
The number of expatriates retiring in Asia will increase as the quality of life improves, coupled with the lower cost of living, says Pitchon, who is from the UK but has been a permanent resident of Thailand for 20 years. To capitalise on this, some foreign investors are said to be developing luxury retirement homes in Hua Hin, a beach town in Thailand, and in Legazpi in the Philippines for the Japanese market.
Malaysia will need to work harder to attract expatriates because the number has fallen from nearly 90,000 in 2000 to almost half that in 2008, according to the National Economic Advisory Council (NEAC).
Upping the ante in retirement homes
In Malaysia, the operations of private nursing homes come under the purview of the Private Healthcare Facilities and Services Act 1998 and Private Health Care Facilities and Services Regulations 2006, while that of residential care centres come under the Care Centres Act 1993 and Care Centres Regulations 1994.
Jeta Gardens retirement living resort founder Tan Choe Lam feels that there should be a separate legislation to regulate nursing homes as hospitals are for the sick while nursing homes are for the elderly. The existing Act requires nursing homes to be run like hospitals, which means higher capital and cost of operations.
He cites Australia as an example of where there are such legislations, like the Aged Care Act 1997 and Retirement Village Act. The former covers matters like management, care, lifestyle, quality and safety issues, and specifies that aged care homes must be accredited under the Accreditation Standards for Residential Aged Care in order to receive subsidies from the government. Each state has its own Retirement Village Act and generally, the Act specifies disclosure requirements, prescribes matters that must or must not be included in legal documentation, regulates certain financial matters and establishes mechanisms for resolving disputes.
Tan says that under the Retirement Village Act, management fees should cover management cost, and operators make money from selling real estate. For aged care, you can only operate such a facility if there are beds allocated to you by the government. There is also a minister for health and ageing.
Retirement and aged care consultancy Skylight Lifestyles Group managing director Richard Lim says if property developers treat retirement housing like normal housing projects, the ventures would probably fail.
“They should treat retirement housing as a lifestyle play, considering the social and emotional needs, as well as the physiology and psychology of the elderly, as these are more important than the physical [design] and financial [affordability] aspects,” he says. He advocates using the Eden alternative care model that fosters residents’ growth in a home-like environment.
“A positive and happy environment has to be created, and the place should be abuzz with activity, such as exercise classes and cultural activities, and family members should feel comfortable visiting the home,” he adds.
Tan offers more food for thought. He says husband-and-wife clients typically move in together, so when the husband is bed-ridden, the wife may not be able to visit him daily if she lives far away. At Jeta Gardens, aged care and independent living units are located nearby so that the wife can walk to visit her husband regularly.
Another important aspect is to encourage intergenerational activities. Research has proven that patients suffering from dementia will smile when they see young children. Hence, a kindergarten or nursery nearby would help these patients. Tan believes more education is needed to prepare the market to accept nursing homes.
This industry is about showing compassion, giving joy and empowering the elderly. We want to make this the best time of their lives.” Profits aside, property developers have to ask themselves if this is the place they would want their own parents to live in.
Payment model
In Australia or the US, residents usually would have sold their homes and used the proceeds to buy a home in a retirement village. So a downturn in the real estate market will affect demand for retirement homes. Both Australia’s Stockland and FKP sell retirement housing units. The annual management fees are deferred until the resident vacates his unit and sells it to the incoming resident. The deferred fee is then deducted from the sale consideration. Under some contract models, the resident does not participate in any capital appreciation, so he will receive what he paid, minus the deferred fee.
As for Jeta Gardens, Tan says there are three categories of residents. The first are the concessional residents, who have limited finances and contribute about 84% of their pension, or about A$40 a day for meals and other services. The next are residents with medium-level assets who pay A$66 a day, and the third are residents with more assets, who pay A$40 a day and place a refundable bond of A$400,000 to cover unpaid fees owed. Tan explains that this bond allows Jeta Gardens to borrow from the bank to finance the construction of homes.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 876, Sep 19-25, 2011
