The half way through of Retirement Village: The developmental challenges ahead and meeting demand
Updated: Apr 22
19 April 2021 - I was deeply humbled to be given the opportunity to speak at Real Estate and Housing Developers’ Association Malaysia (REHDA)'s event titled "The Next Big Thing: Healthy Homes & Retirement Villages" on 15 April 2021.
In the panel discussion session moderated by Datuk Charlie Chia Lui Meng, Secretary-General of REHDA Malaysia on “How can we make the Retirement Village model work and become one of the top operators in this region?”, I was privileged to experience exchange of ideas and perspectives with distinguished panelists who are also experts from the Real Estate industry.
REHDA's "The Next Big Thing: Healthy Homes & Retirement Villages" panel discussion. From left to right. Datuk Charlie Chia Lui Meng, Secretary-General of REHDA; Ms. Malathi Thevendran, Executive Director, Jones Lang Wootton; Mr. Kushairi Lotfi, Non-Executive Director, Aleevar Consulting; Mr. Kenneth Tan, Founder, Kenmerintis Resources; Mr. John Chong, Executive Director, TI Homes, and Mr. Joseph Chong, CEO, Aurelian Sdn Bhd.
My observations on the playing field led me to applaud the only handful of Malaysia’s Retirement Village (RV) pioneers namely Eden on The Park (EOTP) in Samarahan, Sarawak, GreenAcres Retirement Village in Ipoh, Perak and soon to be launched Aurel Sanctuary in Bukit Tinggi, Pahang were bold enough to start this venture. These projects were completed as early as 2017 as I termed it the first half of RVs.
The second half of RV remains ever more challenging in the post-COVID-19 times
During the panel discussion, the fact remains that the demand and need for RV is imminent. However, it poses demand challenges due to the filial piety stigma with Asian culture (i.e. having to send parents to nursing homes), affordability issues, and developmental roadblocks with bureaucracy.
The panelists shared their learnings on business models such as leasing being the more viable option for the operator to have better control and oversight of the management of the property rather than having a conventional outright purchase model. The demand which is expected to derive from Malaysian retirees would still prefer to opt for outright purchase giving the buyer the right to own real estate units. This may stifle the sale of the units because the leasing model would be more pragmatic in allowing the RV operator to have management control including in delivering care and support services to residents.
RV is relatively a new concept where developers are advised to move away from strata title management to leasehold model due to developmental challenges. For example, authority approval needed for a number of car parks allocation or allocation for bumiputra quota. Upon completion of development, the operating and maintenance (i.e. include delivering care services) challenges will start to surface if the RV fails to fetch a critical mass of residents (e.g. 200 units) in order for it to be sustainable.
The panelists agree that the next step to move forward is to have a holistic approach such as having a national blueprint to be spearheaded and championed by the Government’s relevant agencies and authorities. Industry consultation is also deemed pertinent for the development of RV for Malaysia and the ASEAN region.
Islamic-themed RV: The tri-emphasis on social, spiritual, and physical conditions
Earlier in the event, I presented our views on the “Viability of an Islamic-themed Retirement Village in Malaysia" where I touched upon the Muslim living concept. In general, Muslims emphasise the importance of strengthening the relationship among family members and their neighbours, embracing spiritual and religious activities, upholding modesty, and respecting privacy. These are some of the important elements promoters of Islamic-themed RVs need to consider when designing the housing environment which is built upon three important criteria - social, spiritual, and physical conditions.
We believe there is a niche demand from affluent Muslims and professional Muslim retirees for such Islamic-themed RV judging by the findings from our research and views shared by our business networks. Since Malaysia is becoming an ageing nation and Malaysians are living longer, the likelihood of having more RVs is already an excellent business case to meet the demand coming from the baby boomers. Looking further into 2019 demographics between bumiputera and non-bumiputera, we found the ratio is greater for the former for age categories 60, 70, and 80 above which sums up to about 1.88 million bumiputeras aged 60 and above. While Muslims can be found among the non-bumiputera, the majority of the bumiputera is considered Muslims.
In our analysis, the Islamic-themed RV can be considered to be built upon a village environment, a cohousing model, and Islamic values in addition to having must-have services such as medical, nursing & healthcare, and food catering. A village environment promotes social engagement, independence and well-being. A cohousing model promotes access and shared ownership in a communal place, greater social responsibility, and better living options for the elderly. Meanwhile, Islamic values and elements enhance Islamic knowledge and learning, promotes brotherhood and sisterhood, and elevates devotion to the Almighty which are all desirable attributes preferred among Muslim elderly.
However, promoters of such RVs are advised to first conceptualise the purpose-built RV by gathering expert advice before conducting feasibility studies within the addressable market to build a viable business case. The opinions and views among the targeted market are deemed important in validating the concept and features before soliciting for project partners and financiers and seeking the relevant developmental approvals.
The presentation of Viability of an Islamic-themed Retirement Village in Malaysia. Top picture of the hybrid physical and virtual (i.e. Zoom) presentation format with strict observance of physical distancing and having mask at all times. Bottom picture of Datuk Charlie Chia Lui Meng presenting an appreciation gift to Mr. Kushairi Lotfi.
Click here to access the full presentation.