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Property outlook for 2014
The Edge: Let’s start with your take on the outlook for the property market in 2014.
Tan Sri Eddy Chen: Generally, I have not seen much impact from Budget 2014. The landed property market has not slowed down, particularly properties priced below RM1 million. That area is still holding up. I think 85% to 90% of the buyers are not speculators. Some [people] are talking down the market. We will perhaps see a clearer picture after three months or so.
What about high-rises? What is the feedback from Rehda members?
Chen: It’s too early to tell ... There are a few [new] launches but it is too early to tell.
What is the buyer’s perspective?
Dr Chua: If I want to buy, I will look at where the mass rapid transit (MRT) will be. Location is very, very important and now more than ever people want better transport. People do not want to live so far away; they want to have everything nearby. Not only the connectivity, also shops, amenities. I think if you buy along the MRT line, you cannot go wrong.
Terence Saw: Developers are observing closely the price trend while buyers are looking at what the developers are going to do next; what are the new things they are going to come out with. Both parties are staying cautious. Demand will remain strong for residential properties, especially the landed type and in strategic locations. Condos and serviced apartments will be a very cautious area. Financial support from financial institutions will play a critical role in 2014.
Are you then reviewing your projects, including those that are going to be rolled out?
Saw: Whenever there is a market reaction, we always go back to the product, the drawing board to see how we can improve. Market demand is the ultimate; we are very aware of that and we are coming out with more strategic ideas to overcome this issue.
Malathi Thevendran: Moving into 2014, we expect to see a wait-and-see attitude among developers. We think they should build more affordable homes. We have been monitoring quarter on quarter and, already, there is a slowdown in properties priced above RM1 million. Developers are very discerning; they know how to access and monitor market supply and demand. We have also noticed that lifestyles have changed. Besides the convenience factor, more and more people prefer condos to landed homes because of the high prices of the latter.
The prices of high-rises that are strategically located will hold, going forward. There is still population growth, so there is going to be demand. On concerns about the market, though the measures announced by the government to cool the market are timely, we don’t want a drastic drop [in transactions]. We have been on an up cycle long enough and there has to be a correction. 2014 would be more of checks and balances. Developers would do their research and not flood the market.
So, you don’t see the market grinding to a halt?
Malathi: I don’t think it will come to a complete halt. There are still buyers out there — the owner-occupiers. We did a random survey/sampling, which showed there are always people looking to buy houses.
We monitor the launches quarterly. In the mid 2000s — 2005, 2006, 2007 — a huge number of landed property projects were launched because the prices were affordable. But when the prices of landed homes started rising, many people couldn’t afford them. Landed property prices in Shah Alam have gone up to RM750,000 — even in Puncak Alam and Rawang, prices are more than RM500,000. Many people now cannot buy landed property. High-rise living is an alternative.
Would a slowdown in landed property launches push up the prices of such homes on the secondary market?
Malathi: That is already happening. For example, two to three years ago in Petaling Jaya, houses in SS2 were going for RM500,000 to RM600,000 but now, the prices have gone past RM750,000. These are old and basic terraced houses that need a lot of renovation.
So you see active interest in landed properties on the secondary market going into 2014?
Malathi: Probably, if the price levels are still acceptable. If you look at the outskirts, brand-new homes are quite expensive. People might not have much of an option if they still want landed properties. Of course, they have to be realistically priced. I think that’s where the checks and balances come in. We believe capital value growth will slow down. It is bound to happen.
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| Not many developers are prepared to invest in this kind of after-sales service. They would rather develop and outsource management — Chong |
Impact of the MRT
What is the impact of the MRT on house prices?
Malathi: We’ve researched the value of properties, especially high-rises, along the MRT lines. Prices are at a 5% to 20% premium. People are willing to pay slightly more for condos close to MRT lines.
Chong: Landed property prices, even on the outskirts, like Seremban, are going up too fast. Recently, IJM Land launched semi-detached homes at RM1.2 million to RM1.4 million and these were sold within a week. A year ago in Seremban, semidees were going for RM600,000 to RM700,000.
People are moving to areas that are closer to MRT stations or public amenities. High-rise living is becoming more economical and affordable to the working class. Security is another consideration. For those who want landed properties in Taman Tun Dr Ismail or Bangsar, a 1-storey house costs RM1 million, which is ridiculous.
But people are still buying …
Chong: Yes, mainly because there are not many choice investments left. You don’t quite believe what the stock market is telling you. It is better to put your money in bricks and mortar. At least financing for freehold landed property is easy to get. There is also value appreciation. If the transport system can be improved to go beyond Rawang, Tanjung Malim and Seremban, then the value of properties will come down or stabilise.
And your outlook for prices in 2014?
Chong: Without the developer interest-bearing scheme (DIBS) and the government curbing housing loan approvals, only those can afford the homes will be able to buy; not those who want to flip. This will make the developers think carefully, to make sure they deliver value for money.
Tan Sri, what are Rehda’s views?
Chen: According to a report by Bank Negara Malaysia, only 15% of purchasers are speculators. The government has prohibited DIBS, but not many developers use it. I think the government is conscious of the fact that it cannot do too much damage to the industry. The housing industry is very important. The government keeps talking about affordable housing. The only way affordable housing can happen is with supply. At the same time, you need supply in certain categories of housing to actually subsidise some of the affordable housing. The cross-subsidy is huge; it takes about RM140,000 to RM150,000 to build a low-cost unit in Selangor but the government is still talking about RM42,000 … So, you’re subsiding about RM100,000 a unit. Where is the money going to come from? There is no way you can provide affordable homes and curb housing supply at the same time. The moment you curb housing, demand goes up but supply comes down; then prices go up, making housing even more unaffordable.
Chong: I agree with you, Tan Sri, but most of us live here in the Klang Valley, so what we’re experiencing does not reflect the property needs of the whole country. Looking at Johor, Penang and KL ... definitely, we see a very vibrant property market, but the needs are actually greater in the suburbs. Klang Valley seems to be driving the property market and the spillover is seen in Penang and Johor.
Chen: The financing scheme is very different in Australia. They only pay interest. That’s all. For the rest of your life, you just pay interest. No principal payment because they are so confident that at the end of the day, your house price will double. This leads to what we are discussing today. Perhaps for many Australians, this is a transition towards senior retirement homes because the moment they reach 60 to 65, they get rid of their houses. The surplus that they have minus the money borrowed from the bank (the principal stays the same throughout), the balance is then used for their retirement home and it is enough until they die — from low care to other levels. They are happy, unlike us who want to give our assets to our children.
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| If the developers get into it (building retirement villages) for the money, I think they will get a big shock. - Chen |
Building retirement houses - Is this the right time?
Saw, you said developers are looking at being more innovative, introducing new and exciting concepts. Should building for seniors be one of the concepts developers should be looking at? If so, what are the options and challenges? Is there a need for senior living homes right now? Is now the right time?
Saw: I think there will definitely be a need for homes for seniors very soon. To be successful, the location must be strategic. The concept must be well designed and well planned — it should be fun for both the residents and visitors with lots of things to keep them occupied. A wrong overall design and concept with lack of proper management and operation planning will result in failure. Location is very important. Johor, Penang and KL definitely need senior living homes. What is important are the concept and location. It is a long-term commitment (on the part of the developer).
Chong: The need is definitely there. Why? Because all of us will get old. At present, 8% of the population is old. By 2020, 10% of the population will be above 60. This is a big segment of the market, from the low-income to the super-rich. I think many developers are looking at it. There’s just a wait-and-see attitude. It’s just like 30 years ago when Tan & Tan built the first condominium in KL, Kudalari. Everybody just waited to see how it would do. It took more than 10 to 15 years for the condominium market to flourish. It has to go through that process — the regulations, strata title Act, maintenance and so on.
So many factors are involved in building senior living homes. Retirees will live there, not hotel guests. When we talk about aging, we are looking at 20 to 30 years. How to manage this? The physical property is one aspect, which is very easy. Based on universal guidelines and features, you can build such homes. It is the after-sales service that many are cautious about. In Malaysia, not many developers are prepared to invest in this kind of after-sales service. They would rather develop and outsource management.
Many of us have empty nests because of globalisation. If we are well-to-do, the chances are we are living in big bungalows in Taman Tun or somewhere. But who is enjoying the homes? The maids! There’s also the issue of security. So, yes, people are interested in senior living homes and there is a need for them.
Facts and figures
Dr Chua: Let me share some facts and figures with you. Ten per cent of Malaysians are above 60. But most old people would rather live in their own homes. They don’t like to move. That is something we have to bear in mind. We in Pemandu are not only looking at senior retirement homes, but also old folks homes, nursing homes. We are also looking at providing mobile care. It can be provided in your house, so you don’t have to move. The market is niche as it is only for those 50 or 60 and above. (Building) senior living homes is not for all developers; not all would want to do it as it really requires passion and a long-term commitment. You need to maintain the plan. After the retirees die, what happens? There are many factors to consider and there’s actually one coming up in Kuching. If you look at the statistics, only 7% of the elderly live alone right now. About 76% live with their children.
Malathi: Back in 2000, there was interest in senior living homes among certain developers but I think there was low market acceptance because perhaps it indicated that your children were not taking care of you. Now, it is different. We did a survey last year and were surprised to find not only people in their 50s, 60s and 70s were receptive to retirement homes, but also those in the 30s and 40s.
These days, there are more singles while more married couples are choosing not to have children. So the demographics have changed. I think, yes, now is the time. People should seriously consider Malaysia as a place for senior living homes.
When we do research, we always look at the Australians because they started retirement homes in the 1970s. We, at Jones Lang Wootton, even have a department dedicated to healthcare and that type of services.
Interestingly, you would not think India would be open to senior living homes as they have the same culture, of taking care of our elderly. But the industry has blossomed in India ... there’s a long list of retirement homes in north India. I think we may be more ready for senior living homes than we realise.
The problem is, it is a long-term thing. It’s more about the software than the hardware. A lot of the developers here need not get into it. Their launches have good take-up and they are making enough money as it is with the existing structure. So, they ask why they should even bother to invest in the research that is needed to understand the software.
Moving forward, I think as the need increases, we may see a different group of niche developers or even insurance companies that see the market gap. A lot of tie-up is needed for this. Aside from Kuching, I know of another developer that is seriously planning to launch such homes in Ipoh and it is looking at villas.
In India, due to the high prices and perhaps demand, they are going slightly higher on unit basis, so they are going for high-rises. They have created three products — high-rises for city living and further away from the cities, there are two to three-acre or 5 to 10-acre plots. These are the models I think we should look at. The question is, are people willing to spend the time and money on coming up with the proper hardware and software that will make this work? Dr Chua: I know of a medical group that has a hospital, shopping outlets and a hotel that is thinking of going into senior living homes as a development feature of the Klang Valley. It wants to build high-rises and since it already manages a hotel and a hospital, this means its residents will also be its customers.
But will there be a stigma attached to such a project?
Dr Chua: I don’t think so. I guess it can only be successful if you check yourself in rather than your children checking you in.
Malathi: Ten years ago, it was a taboo.
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| I think there must be collaboration between the hardware and the software (providers) with the help of the government. — Saw |
Passion for the mission
Chen: From a realistic point of view, when you talk about needs, there are many types of people ... I don’t think the poor can afford it ... looking at the type of healthcare that is offered in Australia. Even in India, it’s not easy. Not for the poor or even the middle class.
Then, there are the rich. Again, how much wealth is enough? In the Malaysian context, land is going to cost money as is building such homes — there are many aspects to look at: access, emergency alarm, railings, lifts, central monitoring system and so on. There is also long-term maintenance and healthcare ... in Australia, the Victoria government, for example, is subsidising almost A$1 billion a year, so 90% (of the cost) is covered. Its healthcare system is sophisticated and it sees human dignity as paramount, meaning, you die with dignity. This, in the long run, is going to be more expensive than the real estate itself.
Chen: Like what Dr Chua said, if you want to do this, you must have a passion for it. And you must have ethics. If you are not ethical, say, if I put up RM1 million to move into a retirement village, what is there to protect me? If I have to give you RM500,000 to hold in trust for me until I die and all my living cost is to come from that, how about my insurance? If I need open heart surgery, which would cost about RM200,000, where is the money going to come from? In the UK and Australia, for example, it is all covered. In the UK, retirement homes are run by the local council. The care given is of high quality. The moment you move in, they take care of you.
In Malaysia, if the developers get into it for the money, I think they will get a big shock. What is important is that we must not put the cart before the horse. We must do the proper thing. Dr Chua and the government are doing the right thing by doing the lab. (Note: A series of senior living labs have been conducted by Pemandu since 2010, which included 50 representatives from both the public and private sectors.) Proper legislation is key. In Australia, the money you put in — the bond — is guaranteed by the government. Which means if that home for the aged were to collapse, the government guarantees it with the bond. Can we do that in Malaysia? Because when you are old, you are most vulnerable. Legislation is key.
Chong: Today we are trying to put everything in one basket. So much to talk about, so many figures and challenges. If you look at retirement communities, we need to put them in three segments — independent living, assisted living and nursing care. Nursing care comprises high care and low care. Mixing it all together is a no go. I think it is best to leave nursing care to those with the expertise. Assisted living is a natural progression after one starts independent living.
I think it is best to start with independent living, modify the hardware with integrated community living — modification from a normal property development and then you can add other details in 10 to 15 years (hand railings, emergency buttons). It’s for people living in bungalows with their maids, worrying only about what their dog is going to eat. They do not need such a big space anymore and they want to scale down. I think these are the people we should be talking to first.
They don’t need to worry about housekeeping. If they want to clean their house, there is the management and handyman. They can rent BMWs whenever they want to use them, over the weekend, for example. So, start with the upper-middle class. The super-rich don’t need this. They’ve got their own world. Start with a medium-sized, 200 to 300-unit retirement village. Next, have support services, such as a 24-hour clinic, physio, chiropractor, health shop, cafeteria.
Mont’Kiara Sophia in its original form was not accepted by the market. It was built first as a retirement home. Was it ahead of its time?
Chen: Datuk Alan Tong had a fantastic idea back then. Wrong timing. It was ahead of its time. Those days, it was taboo to move from your children’s home to a home (for the elderly). It didn’t matter if the latter cost RM1 million.
Malathi: Sometimes, it is about the timing and whether or not we are ready for it. It is just a matter of evolution for any type of product in the market. Rightfully, it is something we have to dwell upon in Malaysia and there are various types of products. So, it is easier to address the first one (independent living) and there will be buy-in for that and the subsequent segment.
Legislation necessary
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| We are looking at the development of good caregivers. It’s a matter of how we can convince our young people that caring for the old is a profession they can be proud of. — Dr Chua |
Chen: I think in the Malaysian environment, it is critical to place the horse before the cart. Legislation must come in. If you don’t, there may be one or two developers out there that are going to jump in, do something to spoil the market and the next thing you know, nobody is going to trust senior living developments. If you look at mature markets, there is still a lot of cheating going on, in the US, for example. You look at old folks … money put in trust can also disappear. How? Will it (legislation) come under the Housing Developers Act (HDA)? It’s a residence. No doubt, you call it a home for the aged, but it’s still a residence. Any residence of four units and above comes under the HDA. Again, the HDA limits you to what you can do. The kind of strata issue, management corporation … all these things need to be taken care of. At the end of the day, the management corporation cannot be taking care of healthcare issues, cannot be taking care of cafeteria money, the common areas. Will the kitchen be a common area? Besides the legislation needed, there’s still the cultural issue. Malay, Chinese, how do you live in the same aged care environment?
All these kinds of issues (cultural, religious) need to be ironed out. I cannot emphasise enough the fact that Pemandu has to come in very clearly on what the legislation is that needs to be changed and how you are going to govern it. You know, do it right from the beginning.
Saw: In my research on the success and sustainability of such schemes, I think there must be collaboration between the hardware and the software (providers) with the help of the government.
Chen: Regulations must be in place. In Australia, they put your fees in a trust. If you go in there and you die a year later, they will calculate how much money you put in, deduct all the costs incurred and return the balance to your estate. But under the national land code, you cannot do that. So, leasing agreements and all that will be very complicated in a sense that, how do we calculate your investment? How old are you? You put in RM100,000 or RM200,000. Are you buying the strata property or are you buying a lease? This lease is not for 30 or 60 years but conditional on the fact that if you die or move out, they have the right to use it. We haven’t got such a law. So, what do we do?
Hardware versus software
Chong: Actually, people move into retirement homes because of the software. (Providing) the hardware is the easiest. It only makes up 20% to 30% of the whole scheme. It’s just like going to a hotel, you know. Any hotel without the service …
Chen: Like I said, the software is going to be probably more expensive than the hardware. Probably in the next 20 years, you’re going to use up RM1 million … but the hardware would cost only about RM500,000. Because you just need a room, a studio type.
In active retirement homes in Australia, you have very active people who go around on their bicycles. But they’re still only living in a small unit, maybe about 500 sq ft. That’s it, that’s all they need, husband and wife. But then, downstairs there is a barber, the doctor comes once a week, there is a common room, a library, a small gym, physiotherapy room and all those things. Still, there is the monitoring system — where they are, where they go, which part of the building they are in. It’s very expensive, it can cost you up to A$1 million for just that room.
Chong: But these facilities come cheaper for a paying community versus an individual. Modern working couples these days get stressed if they have to go back to Melaka, Muar or wherever to visit their aging parents over the weekend. Filial piety these days is so different from the agricultural era. During Confucius’ time, people had more children to take care of them in their old age and the fields too.
Now, having two children is a big enough challenge and then they can go anywhere, plus you have computer connection. You can talk to your children face to face on your smartphone. So the concept has changed. Even if you talk about KL, if you’re living in Kajang, how are you going to look after your parents who are living in PJ? Are you going to see them for dinner every night? Not possible. Weekends? If you stayed in a community, at least you know there is a support group, everybody is happy, and then the lifestyle is something that they want … In smaller towns, you have those elderly men in the coffee shops because they cannot live life alone by themselves. It is too boring.
Malathi: Retirement villages are very comfortable because they all have the same mindset. You know, those above 50 have community games, community activities and they feel that they themselves are vibrant enough as opposed to being a burden where your children may complain about you. Here, they are stress-free in a way because they have the same thinking level. But the point is, are they ready for this?
Chen: I think globally, this is going to be an issue that will preoccupy many governments. Malaysia, of course, is considered young, but in places like China, Japan and even India, it is different.
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| In the Klang Valley, places like Kajang or Rawang, 15km to 25km out of the city would be ideal. Seremban and Ipoh are interesting too. - Malathi |
Malathi: Of the total 1.2 billion population in India, 96 million is above 60 years old. It is estimated that 3.5 million (3.5%) need special care (medical). The number is growing. When the statistics came out, I was surprised that they actually had a working paper on it. In India, where we think senior citizens would not want to live by themselves because of the stigma attached to it, hundreds of retirement villages have been built over a short period.
Chen: America and even Malaysia are getting there. Families are getting smaller. Those days, Malays had five to seven children. Today, the urban Malay cannot afford more than two children. So, you see this population growth is accelerating and there are fewer young people to take care of the old. China, of course, is the worst-case scenario, where they have one child taking care of their in-laws and their own parents. So it’s going to be a global issue. So, how do we do it? Every country has its own way based on its economic situation. We don’t have a social safety net unlike Australia, England and Sweden. These governments have a huge budget to take care of the old.
Dr Chua: Japan has long-term age insurance. Everybody aged 40 and above has to contribute to it. Here, we are coming up with a bill for aged healthcare. Right now, if you want to set up an old folks home, you have to register under the Care Centre Act. You just need to register; they do not even provide you with a licence. That’s why, Tan Sri, you mentioned all those old folks homes have no standard and all that. Nursing homes however need to be registered under the Private Healthcare and Services Act. You need a licence. That’s why you only have 16 nursing homes; you have 200-over registered old folks homes but there may be hundreds out there that are not registered. So, what we are trying to do now is to come up with a bill that will regulate the facilities and the services. The facilities we are talking about can be of different tiers — for those who are still active, those who are assisted or in a nursing home, the dependent type.
Right now, in old folks homes, when you go in, you are still active but after a while you age … but the type of services provided do not commensurate with the aging. So, what we are trying to do is that you either build one that is tier 1, tier 2 or tier 3 or all the three tiers. So I look at retirement villages as tier 1 where the community is still active but you can either build within it some healthcare facilities to support the residents or you can buy the services.
Role of government crucial
Dr Chua: Right now, mobile care is not legislated. When my late parents were living in Melaka, we were living in KL and we could not go home every weekend. So we engaged private mobile homecare. But they are not legislated. Anybody can set up such a service. Most of them are run by nurses or ex-nurses … But the thing is, they are coming into your home. You don’t know who they are. You are opening your home to these strangers; they may even hurt you, you don’t know. We are trying to rein these in. We realise that there are many (of such services) that are run by churches or temples or religious bodies. We also don’t want to make it so tough that all these will not be able to comply. Like dialysis centres, we still must make sure they meet the standards, but then you have to give them ample time (to comply). So, we are coming up with this bill for aged healthcare, hopefully, before the end of next year and we will give all those people two to three years to comply. Then when we grow old, we do not need to move to a retirement village. We can live at home and be sure that the services provided to us are of good quality.
Does this mean there’s a limited market for senior living homes because you can remain where you are and have people come to your home to provide you with whatever you need?
Dr Chua: But then, some people may want to move out (from wherever they are living), so it all depends. There will be a market. Actually, there’s a survey that I saw recently done by one of the government departments. Although it was not a big survey, about 23% of people sampled do not mind moving to another community.
Chen: I think what Dr Chua is saying makes sense because you have low-care active living, high-care and nursing homes. A lot of people are very scared to move out after they have lived in a place for 5 to 10 years. There’s a lot of anxiety at the thought of moving to an unfamiliar environment. So I think it’s better to have an integrated community with shared facilities. This is what the community in Australia is doing — you have different floors or different wings and all those who are still active have all these activities, a lot of games. The high-care people need their quiet but when they look out the window, they still see familiar surroundings. It calms them down. I think integration is important. Shared facilities will also lower costs.
Dr Chua: I think there’s opportunity to build for this type of market. More importantly, we are looking at the development of good caregivers. In the end, this will only be successful if you have good service providers. It’s just like nurses for hospitals — they need proper training. The department of skills training has come up with a syllabus. In fact, Australian firms have set up shop here to provide that type of training. The demand for it is tremendous. Everybody wants to be properly trained.
Long-term commitment
So, we agree that building homes for seniors will not work without the software?
Malathi: Definitely. Without the software, don’t even consider it.
Chong: If you go to a resort hotel, you pay a premium for the weekend. Why? Because of the service, you want the environment. So if you go into a retirement home, it’s not going to be cheaper, but then again, what do you want? You want peace of mind. You want to have a lifestyle. There’s going to be a major shift then. You want a dignified kind of living.
Dr Chua: The bill for aged healthcare is 500 pages long. It is very detailed because it is (proposed to be) 90% subsidised by the government.
I think the government cannot be looking after everybody. Those who can afford to look after themselves should do so. I think we are one of the few countries in the world where you can get access to healthcare anytime, even if you are not insured, not like in America. But the problem is what type of service you are getting. Obviously, if you stay in a big city like KL, the waiting time is long because of the volume. But if you stay in a small town or kampung, access to healthcare is better. That’s why we’re coming up with the aged healthcare bill. We also talked to insurance companies, there is no long-term healthcare. Insurance does not cover home care. It only covers me if I go to hospital or the clinic. But then if we are legislating home care in the future so insurance will cover it. One more thing is reverse mortgage. A lot of countries have reverse mortgage, but we don’t. We have talked to the central bank and even though it’s in their 10-year blueprint, it is very complicated.
How can we convince our young people that caring for the old is a profession they can be proud of? And there’s the money. Right now, in most of the old folks homes, you find foreign workers. There is a need for guidelines in the town and country planning retirement villages, nursing homes and all that. There are still many things to be done.
Realistically, when can these be put in place?
Dr Chua: I don’t think you want to wait for everything to be put in place. Certain developers that are already involved in healthcare will move faster than the rest. The pure developers will have to do a lot of calculations.
Chong: There are many barriers to entry for developers — from care service providers and financial aspects to legal matters and insurance.
Looking at REITs
Chen: I think real estate investment trusts (REITs) may be able to make an impact. Say, developers build according to the specifications of international standard care facilities. The building is then sold to a REIT based on a yield worked out following the Australian model, where an actuary works out the numbers based on lifespan probabilities, clinical and surgical costs.
From there, they can run it exactly like the Australian model. But then again, your legislative framework must be in place. The people (investors) must be protected.
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| Activities need to be planned regularly in senior living homes to keep older folks active |
The right location
What would be the ideal location for such a community?
Chen: I think it can be anywhere. Of course, not in the middle of the city but in any suburb. If you look at the Australian model, they are everywhere. But it cannot be in the middle of nowhere; you must be near a suburban mall or shopping centre. Preferably maybe near some public transport but of course in Malaysia that is difficult to come by. In Australia, it’s very self-contained and self-reliant. They have vans and cars to take the people out if they want to go for recreation. That will cost money, so that is exactly what we’re saying. It will probably be for the high-income people, not even for the middle-income people. But of course we’re hoping the high costs will slowly trickle down to low costs. The location must be decent, near amenities, near hospitals and near healthcare facilities. That is very important. Maybe 1km, 2km or 3km from towns or suburban areas ... I think that’s fine. And of course it also depends on the level of facilities you want to provide. PJ, Kajang and Kepong are good locations but probably not somewhere in the middle of nowhere.
In Malaysia, we’re looking more at high-rises but of course you will need lifts. In Australia, every floor has its own canteen and the canteen is very big and must accommodate wheelchairs. That costs money too.
Dr Chua: Australia has sprawling developments, but here we don’t have that much land and it’s expensive and there are transport issues too. So I guess in the end we will have to build high-rises and more people would like to be near amenities. That’s why groups like Sime Darby or even Sunway will be able to do it because they have the landbank and the facilities within their developments.
So again, it’s about easy access to amenities …
Dr Chua: If you are still with a spouse, you won’t mind staying a bit further out but once you are alone, that is when the reality hits you.
Saw: Like Tan Sri said, you have to be near all these amenities. Due to land being scarce nowadays, I think the government needs to help provide it. For example, Sungai Buloh is ideal as are Damansara, Cheras, Cyberjaya, Bangi and Kajang.
Malathi: Feedback from our surveys shows that the most important need is accessibility to medical facilities — that is actually what people want. This is followed by accessibility to shopping facilities. Gym and fitness also surprisingly came up high on the list but these facilities have to be customised — even the handicapped need to keep fit. Recreational facilities — social clubs — also matter. Surveys done in India also showed a need for healthcare accessibility. They used the words ‘social ecosystems’. In their case, they also identified their want for temples, clubs, entertainment and recreation.
Connectivity to the major cities, activity hubs and employment was also highlighted. In Sydney, retirees who are fit felt they could still contribute to society — they could work part-time. They felt like they could still commute to the city, where they could still take meetings with people even if they were 55, 60 or 70 years old. Because they felt like they could do some consultancy or advisory services. So that was something consistent. As for location, in the Klang Valley, places like Kajang or Rawang, 15km to 25km out of the city would be ideal. Seremban and Ipoh are interesting too.
Iskandar Malaysia - Do you see any prospects there?
Malathi: Definitely because of the target market there. All the developers there are already looking at retirement villages.
Chong: The first one or two projects will have to be in the urban areas before we talk about the suburban and rural areas. Because I think these will be meant for urbanites who want to find a place that’s convenient. If you were to cater for those still active I would also want to set up a business centre within the active living community. A meeting room, a secretariat where people can help us prepare all the filings and meetings and then after the meeting you have your cafeteria ready. You still can conduct your business as well as be an adviser to a small company. You may want to work three or four days a week and you can also generate some income because I think Malaysians are retiring too young at 55, 56. What if you live up to 80 or 90?
It’s one of the things the government should give incentives for: retirees who are still working. You can tap their knowledge and experience rather than use so many foreign consultants. Local consultants and advisers can help the young starting out in business who are struggling and you become a mentor to them and they give you RM3,000 to RM4,000 a month. They get wisdom from you and help you feel active and useful.
Chen: The location will depend on where demand is. So if demand is in Rawang, you go on and do something there because there are enough old people to support facilities with 120 or 130 units. If you look at Taiping, it is a very nice place to live and it has an aging population that is higher than anywhere else in the country because all the young people have moved out and left all the old people there. Ipoh is also a good place to retire to. So I think location will depend on demand. But wherever the demand is, the facilities must still be close to certain amenities.
So Tan Sri, is MKH coming up with retirement villages?
Tan Sri: We’re thinking about it. In fact, I have proposals from some landowners. What we might do is probably (through) REITs. Let’s say if all the REITs are encouraged to maybe put 5% of their REIT properties in retirement homes within the next five years. Then the government gives incentives such as tax breaks, other kinds of facilities, legislative support and so on.
Chong: Instead of making it compulsory for developers to do low-cost housing, we should do like the Singapore government — if you have a 10-acre tract, maybe 30% can be allocated to designs for the aged. In Singapore, certain units are designed smaller for active elderly couples whose children live in bigger units in the same development. That would be better than low-cost housing, which people are not very happy to do. Then, it is not properly done. In the end, nobody really benefits from it.
This article first appeared in The Edge Malaysia Weekly, on December 23, 2013.
