No developers yet to venture into developing retirement villages

No developers yet to venture into developing retirement villages
Dec 23, 2009 - PropertyGuru.com.sg

The ageing population in Singapore indicates a rising need for better medical facilities and care for the elderly - not least of what would be a retirement village for the more independent-minded.

Retirement communities or villages are huge businesses in countries like Australia, the US and in Europe. It includes amenities like swimming pools, clubhouses and golf courses, as well as medical facilities within the site. However, Singapore developers are not keen on the concept.

The government seeks to encourage the development of a retirement community in Singapore. In fact, it released in February 2008 a parcel of land in Jalan Jurong Kechil, near the Bukit Timah Nature Reserve, with a lease period of 30 years, specifically for a retirement village. To date, no one has taken it up.

A quick check with several major property developers showed that none were willing to embark into retirement villages. Most cited high costs and unfamiliarity as barriers to their entry.

According to Ong Choon Fah, regional head of consulting for the global real estate consultant DTZ and executive director in Singapore, building a retirement village is not a straightforward task, as there are a lot of issues that still need to be resolved first.

“I think it's something that will happen in time to come. But, in the meantime, there are some issues that need to be addressed, issues which we've explored with several clients who have expressed an interest in developing retirement homes on the Jalan Jurong Kechil site,” she said.

“First, there's a question of the land. Most of our clients have expressed an interest in a freehold plot, rather than one with a use-by date.”

“A retirement village also differs from a normal property development because it has other amenities and may need some level of medical care on site. This makes the upkeep of the entire community rather expensive - and such a concept will most likely be targeted at the higher end of the market,” she added.

However, perhaps the most important issue that must be addressed is the legislative one. While there are laws governing home purchases in Singapore, there are none that relates to transactions in retirement communities - unlike in countries like the US, Europe and Australia, where well-established laws governing the business are available.

Mrs Ong says: “There's the question of the business model for the retirement village. Will residents buy or rent the units? If they buy it, will they be able to sell or will away their units to their children? Will young people be able to buy? An exit strategy is very important. And there are major issues that need to be worked out to ensure a win-win outcome for all stakeholders involved.”

Daniel Teo, property developer and former chief of Redas (Real Estate Developers' Association of Singapore) is up to the challenge. “I want to offer a better lifestyle to the elderly folk here, give them that companionship they need. Develop something that the ambulant can live in comfortably,” he said.

“But yes, there are issues that need to be worked out - laws that need to be developed. I think the government needs to take the lead in this.”

“Perhaps I can arm-twist them into developing such legislation when I build a retirement village,” he quips.

Mr. Teo has visited different retirement communities and villages worldwide to get ideas.

He said in an interview that he has already found “some 20 to 30” like-minded folk, who are also keen on developing a retirement village. These include lawyers, doctors, and even former Nominated Members of Parliament – “some of whom have even engaged their own consultants to draw up plans for a retirement village.”

“I hope this will be a reality in my lifetime,” he said.