From migrant workers to seniors: Dormitory operators eye diversification into eldercare

MIGRANT worker dormitory operators are tapping the experiences gained during the pandemic to expand into eldercare and assisted living services, ahead of what some market watchers said could represent the next growth opportunity in commercial real estate.

At least two dormitory operators that ran Covid-19 treatment facilities (CTFs) and transitional care facilities (TCFs) said they are seeking to diversify their revenue sources.

One migrant worker dormitory operator that has shifted into the eldercare sector is TS Group, which is part of a new project exploring the development of apartments for seniors and live-in foreign worker caregivers.

The project is a collaboration involving the Ministry of Health (MOH), the Ministry of Manpower and the Agency for Integrated Care.

TS Group’s operations manager Hans Gouw declined to comment on the specifics of the project, but said the company has identified a “missing middle” in the eldercare sector: about 80,000 to 100,000 seniors are fairly mobile, but ineligible for nursing homes.

The company hopes to focus more on serving seniors who have lower clinical care needs. It is partnering healthcare providers to ensure live-in staff are well-equipped to provide for the daily needs of the elderly.

“(Elders) can be very fragile at that particular age, so (staff) should know… how to wake up the particular resident while they’re in bed or even to move around,” he said.

TS Group chief operating officer Tome Oh added that the company picked up some understanding of medical standards and operations while running TCFs and swab centres during the pandemic.

MOH said in August 2022 that TCFs could be stepped down to house non-Covid-19 patients waiting for a nursing home.

Dorm operator Tee Up Capital, meanwhile, wants to help alleviate the manpower crunch in the eldercare sector.

Chief executive Kelvin Low’s takeaway from managing CTFs and TCFs was that some services in medical facilities do not require medically trained professionals. These include housekeeping, administrative services and food distribution.

“If we can find a way to help alleviate all these healthcare professionals from non-medical-related work, then perhaps that shortage (of manpower) will not be so acute,” Low said.

Growing demand

Market watchers see growing demand for such services.

According to Carol Ma, an associate professor at the Singapore University of Social Sciences, Singapore needs more solutions to help elders age within the community, as it can be very expensive to house elderly residents in nursing homes.

Most elders do not want to live in nursing homes anyway, she said. Live-in caregivers caring for multiple seniors in an apartment would allow these seniors freedom of movement and activity while supporting them with daily needs.

She cited an example in Vancouver, where residents of a dementia-friendly village live in houses with individual rooms and attached toilets.

Staff members do not have to be around 24 hours a day, but check on residents daily.

“Perhaps we can maintain their ability in the community. That is the most important part,” she said, adding that a senior who is not adequately cared for may see further deterioration and require expensive day care or nursing home stays.

Knight Frank Asia-Pacific head of living sectors Emily Relf said the eldercare segment should grow significantly as Singapore ages and government support boosts the industry’s development.

“I see living sectors in Singapore, really in the next decade, being quite transformational,” she said. “A lot of it comes down to a cultural shift as well; there are deep-rooted family values and the lack of awareness around assisted living.”

There have been three transactions of senior living assets locally since 2014. Relf said the small number is to be expected as the asset class here is still in its development stage.

In other markets such as the UK, Relf said yields on such properties are in the region of 5.25 per cent – higher than the 4 per cent yields from build-to-rent properties and 5 per cent yields on student accommodation.

“The senior-living yields are a little bit higher on that spectrum,” Relf said.

“It’s seen as a relatively immature market, but also as quite operationally intensive.”

Yields will compress as the market matures and investors become more comfortable with this type of asset, she added.

In June this year, a subsidiary of Perennial secured a S$71.9 million tender for a private assisted living development in Parry Avenue.

The company said it will partner Wilmar International to provide its residents with meals that cater to their dietary needs.

Sing Tien Foo, provost’s chair professor of real estate at the National University of Singapore Business School, said dorm operators making an eldercare pivot will need to consider which responsibilities to take on.

In the more mature hospitality industry, a developer builds a hotel and an operator runs it. As the assisted living sector is nascent, professional operators of community care apartments have yet to be established.

Dormitory operators typically operate as both developers and operators of their facilities because the services provided to migrant workers are relatively basic, he noted.

He is not surprised that dormitory operators are looking to diversify their businesses, as new regulations to ensure safe distancing in migrant worker dormitories will have an impact on their margins.

“Probably, there will be a lot more (assisted living) demand from the mass market. I think the very high end – those very high-income individuals – probably should be able to take care of themselves,” Prof Sing said.

Eldercare operators will need to focus on long-term returns because they could lack the adequate scale in the short term. Pilots run by the government could help companies figure out the types of services that will be in demand and scale them.

While the government is building community care apartments in estates such as Bukit Batok and Queenstown, Prof Sing said the government alone will not be able to fully meet the nation’s needs.

He added: “By experimenting with their models in a private setting, subsequently, the same operator that offers this kind of assisted living packages can expand their services to some of the HDB (Housing and Development Board) neighbourhoods.”