Date: July 10, 2019
Centurion, which snagged The Enterprise Award at this year’s Singapore Business Awards, is seeking to diversify into other accommodation assets.
“We’re constantly monitoring and exploring other opportunities in Specialised Accommodation,” Kong said. “This includes senior living or retirement housing, co-living and variations of worker accommodations.”
Co-living, where young working professionals share apartments with common areas that promote community experience and social interaction, is popular in metropolises worldwide. Senior living, which includes independent living, assisted living as well as retirement villages, caters to the needs of adults aged 55 and beyond.
Looking ahead, Asia’s industrialisation wave will drive demand for quality accommodation to house expanding foreign or migrant worker populations, Kong said.
Growing awareness by regional governments of the need to improve the welfare of their foreign workers, as well as rising demands for Responsible Business Alliance-compliant accommodation from the manufacturing sector, bodes well for the Group. The RBA is a non-profit industry coalition committed to supporting the rights and well-being of workers affected by the global supply chain.
The student property market also retains a favourable outlook. According to Knight Frank, exponential growth of the global middle class has spurred demand for education, and consequently, the number of students studying outside their home countries has jumped by 23% over the last five years. The OECD has forecast the globally mobile student population to expand to 8 million by 2025, from 5 million in 2019.
Another factor is low supply in the markets of Australia and the UK. According to Knight Frank’s UK Student Housing Development Pipeline 2018-2019 report, the country’s purpose-built student accommodation market is experiencing severe undersupply of beds, with full-time students outnumbering bed space by a ratio of 3:1.
“Because of this, the UK remains a key market for the Group,” he added.
Australia is another bright spot. Deloitte Access Economics expects international student numbers to jump to 720,000 by 2025 from about 500,000 today, reflecting a compound annual growth rate of 3.8%, according to data from its Australia International Education 2025 roadmap.
Passion and Heart
Robust industry conditions aside, some of the key challenges faced by Centurion revolve around its customers. Moving from manufacturing a product to providing a service involved a steep learning curve, Kong admitted.
“It’s not just about providing a roof and four walls for our residents – it’s about people management with a heart,” he pointed out.
“Previously, we manufactured a product, and it was just a matter of quality control and getting the specs right. Now, we’re dealing with people – not just one or two, but several thousand. That’s where service standards are critical.”
Centurion’s residents are also vulnerable groups in society. “They have left homes and families, and have physical, mental and social needs,” he noted. “Our staff must have the heart and passion to ensure our customers are satisfied and happy.”
Regulatory and legal risks also abound. Any change in government policy – such as the issue of student visas – can have a negative impact. “That’s why it’s important for our assets to be geographically diversified,” he added.
When he’s not dealing with the Group’s day-to-day operations, Kong is spending time with his three daughters – a 14-year-old and twins aged 21.
“My kids always worry that whatever they learn will be obsolete when they enter the workforce because the world is changing so fast. I tell them that while it’s good to look into the future, don’t look too far ahead, as you may get lost in the process,” the 54-year-old said with a smile.
“The world is evolving no doubt, but nothing is for certain.”
Instead, one should focus on adapting to changes that crop up, he added. “Always think that something can be done better, and go the extra mile. That way, you will add value to yourself, and add value to the company.”
- As at 31 March 2019, the Group operated a diversified portfolio of 31 operational purpose-built worker (PBWA) and student accommodation (PBSA) assets comprising 62,656 beds across Singapore, Malaysia, Australia, South Korea, the UK and the US, representing an increase of 13.1% in bed capacity from FY2018.
- Worker Accommodation
- The Group expects demand for PBWA to remain stable in Singapore as demand has continued to outstrip supply during the quarter. As at 31 March 2019, Centurion had a total of 26,100 beds across four operating worker accommodation assets in Singapore, with a high average occupancy rate of 95.9%.
- The government has kept the foreign worker quota in the construction, marine, processing and manufacturing sectors unchanged in Budget 2019, contributing to a stable supply of foreign workers.
- With the Jan 2019 opening of Westlite Bukit Minyak – its first development in Penang and seventh in Malaysia – Centurion operated approximately 30,300 beds across seven worker accommodation assets during the quarter. The assets, which are well-located in key manufacturing hubs, enjoyed an average occupancy of 90.3%, excluding Westlite Bukit Minyak. Westlite Bukit Minyak underwent retrofitting after completion in Jan and is expected to be ready for occupancy by 2Q 2019.
- Demand for PBWA in Malaysia is expected to be driven by the government’s moves to ensure proper housing for foreign workers.
- Student Accommodation
- As at 31 March 2019, the Group had a portfolio of approximately 6,256 beds across 20 operational assets in the US, UK, Australia, Singapore and Korea, up 11.6% from FY2018. Overall average occupancy for its student accommodation portfolio – excluding dwell East End Adelaide and dwell Dongdaemun – was 88.1% for 1Q 2019.
- Despite uncertainty surrounding Brexit, increased acquisitions of PBSA assets in the UK by global investors as well as an uptick in the development pipeline underscore the resilience of the sector.
- RMIT Village in Melbourne achieved a high average occupancy of 80% based on available beds for 1Q 2019, despite its Asset Enhancement Programme. Of the 160 additional beds under AEP, 113 were completed in 1Q 2019 and the remaining 47 beds are expected to be ready in 2Q 2019. dwell East End Adelaide was completed in 4Q 2018 and began accepting occupancies in Jan 2019.
- Similarly, South Korea’s international student population has been growing, with the country currently on track to hit its goal of reaching 200,000 students by 2023. dwell Dongdaemun has completed refurbishment and was ready for occupancy in late Feb; occupancy is expected to build up progressively and begin accreting revenue over 2019.
- Centurion’s six US PBSA assets achieved healthy average occupancy rates for 1Q 2019. The Group remains optimistic about the US market, where demand is underpinned by the increasing number of university-age individuals.
- In Singapore, dwell Selegie achieved an average occupancy of 91% during the quarter. The positive supply-demand dynamics within the segment and the anti-cyclical resilience of this asset class point to a healthy outlook.
Centurion Corporation Ltd
Centurion owns, develops and manages quality, purpose-built worker accommodation assets in Singapore and Malaysia, and student accommodation assets in Singapore, Australia, South Korea, UK and US. The Group has a strong portfolio of 31 operational accommodation assets totalling approximately 62,656 beds in 2019. With projects under development and undergoing asset enhancement works, the Group’s portfolio of accommodation assets is expected to grow to approximately 68,756 beds by FY2020.
The company website is: www.centurioncorp.com.sg.
Click here for the company’s StockFacts page.
For the three months ended 31 March 2019 financial results, click here.
First published on SGX website on 14 June 2019
About kopi-C: the Company brew
Text: Jennifer LH Tan
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