Rethinking Centurion’s role in housing workers

REAL estate investment trust (Reit) investors here are already spoilt for choice in terms of property asset classes. Soon, they may also get exposure to workers accommodation assets.

Think of the stable demand for housing the army of foreign workers in construction and other sectors that translates into steady recurrent income for Reit investors.

Centurion Corporation’s potential listing of a Reit comprising workers accommodation and student accommodation properties on the local bourse will be much welcomed by supporters of Singapore’s Reit sector and the broader listed equities market.

However, is there risk from the potential shrinking of the private sector’s role in housing workers? Arguably, the public sector could play a much larger role in this area. 

The first government-owned and built foreign worker dormitory, located in Jurong, is scheduled to open in early 2026. This dormitory is the first of two that will be built and owned by the Ministry of Manpower, with the other dormitory in Sengkang West expected to be completed around mid-2028.

Workers accommodation

For the first nine months of 2024, Centurion’s revenue jumped 25 per cent year on year (yoy) to S$186.5 million. Purpose-built workers accommodation accounted for 77 per cent of revenue by business segment, and Singapore contributed 70 per cent of revenue by country.

Revenue for the group’s Singapore workers accommodation business rose 31 per cent yoy in the first three quarters of last year.

Its segment profit margin for workers accommodation and student were 66 per cent and 50 per cent, respectively, in H1 2024. 

Centurion is a leader in workers accommodation in Singapore. A presentation given by the group in January indicated that it operates 10 dormitories for workers with a total capacity of 36,436 beds. The group’s latest purpose-built dormitory Westlite Ubi, with 1,650 beds, became operational in December 2024.

Demand for dormitory space comes from work permit holders in the construction, marine shipyard and process sector as well as work pass holders outside these sectors. 

While private sector providers of workers accommodation here have to comply with tough standards, there may be merits to the public sector largely providing workers accommodation.

One, many businesses will reap cost savings if the public sector houses workers for cheaper. Such cost savings might in turn lower construction costs of public and private sector projects, thus benefiting tax payers plus end users. Also, cost competitiveness of various businesses may improve with lower costs of housing workers, which matters when profit margins are tight.

Two, foreign workers living in dormitories here will benefit should accommodation standards improve when a government agency provides such housing. Think of how the Housing and Development Board (HDB) is meeting the housing needs of many local residents with improved designs of HDB estates and flats over the years, and the introduction of typologies such as HDB flats that cater to the elderly as the population ages.

Moreover, pandemic response could improve if a government agency provides workers accommodation.

Ultimately, the cost-efficient provision of high-quality workers accommodation will enhance Singapore’s attractiveness to migrant workers and their productivity.

Growing Singapore’s equities market matters. However, striking the right balance between what the public and private sectors should do may matter more for larger national objectives.

Healthcare

Looking beyond workers accommodation, consider the healthcare sector.

Raffles Medical Group is a home-grown regional healthcare group, whose growth has helped enrich its executive chairman Dr Loo Choon Yong.

The group posted revenue of S$365.7 million, and profit after tax and minority interests of S$30.6 million for H1 2024. 

Raffles Medical’s Singapore operations include its flagship Raffles Hospital along North Bridge Road plus various medical and dental clinics islandwide. Broken down by geography, Singapore contributed 89 per cent of revenue for 2023.

Should the healthcare system here see residents almost exclusively served by the public sector with hardly any role for the private sector? Possibly – people need not then fret over escalating premiums for insurance plans that provide coverage for private hospitals.

Several arguments support having a system where residents almost entirely depend on public healthcare.

One, training doctors is costly. Keeping medical practitioners within the public system arguably optimises the use of resources. Indeed, the national good may be undermined if doctors move to private practice in, say, aesthetic medicine. 

Two, concentrating medical talent within the public sector can improve healthcare standards and cost-effectiveness.

Public sector doctors gain knowledge from handling many patients. Also, these doctors may have more leeway to take time off for training to keep abreast of latest developments.

More importantly, having a large public healthcare system that reaps economies of scale and is not profit-driven may best manage healthcare costs.

Three, Singapore must avoid any risk of having a well-functioning private healthcare sector – where patients who can pay are served by top medical talent – that thrives at the expense of the public system.

A public healthcare system that serves a broad range of socio-economic groups strengthens social cohesion. And intense scrutiny of such a system will help ensure that it continuously delivers top quality care.

Raffles Medical strives to enhance health and well-being by providing the best total healthcare. Centurion aspires to be a provider of choice in the accommodation sector through a holistic management approach, offering residents quality and comfortable accommodation within a safe and active community.

Their aims are noble. Still, investors should mind the risk of the possible shrinking of the private sector’s role in housing workers and meeting healthcare needs. Bureaucracy actions can upend what appear to be sustainable and resilient business models as the government wields huge influence over the size and returns of many markets.