News: Can Iskandar take off as a hinterland for Singapore's ageing population?
Malaysia & Singapore News
Can Iskandar take off as a hinterland for Singapore’s ageing population?
The Business Times. Published March 13, 2014
SINGAPORE has one of the world’s fastest ageing populations. The average life expectancy of Singapore citizens from birth has risen from 78 years in 2000 to 82.3 years in 2012. With increasing life expectancy and advancing medical and pharmaceutical technologies, it is estimated that by 2030, there will be 900,000 elderly persons aged 65 and above, tripling the current figure. This is equivalent to 20 per cent of the total population.
Currently, 81 per cent of the elderly population live in Housing Development Board (HDB) flats. About 17 per cent live in private residential housing and the remaining 3 per cent in nursing homes. Of those who live in private properties, about 41 per cent derive their main source of income from their children or spouse, while 51 per cent are self-sufficient.
According to Singapore’s household balance sheet statistics, Singaporeans’ average net worth has been increasing slowly over the past few years. One may think that since the overall net worth of Singaporeans is slowly increasing, Singaporeans can look forward to a comfortable retirement. However, things are not as straightforward. A large proportion of their wealth is locked up in illiquid assets, such as property. Based on Q3 2013 household sector balance sheet data, about 49 per cent of household assets consist of property and only 19 per cent is held in currency and deposits.
Some Singaporeans face difficulties in monetising their assets for retirement. Thus the saying that Singaporeans are “asset rich, cash poor”. As a result, retirees have to plan their retirement accurately with little room for error; some old folks might also have to continue to work in their sunset years to support themselves financially when their retirement savings do not keep pace with the cost of living.
The worrying trend has prompted the government to make some policy changes in recent years. On top of increasing subsidies for lower to middle-income Singaporean families, the government has also introduced some housing options for senior citizens:
- 30-year lease studio apartments with elderly-friendly features
- Lease Buyback Scheme and Silver Housing Bonus Scheme
- 60-year lease private site with the option to develop a retirement village
However, there are limited resources that the government can put aside to provide for retirees, especially those in the middle and upper-middle income groups. Many retirees are still active and healthy in their silver years, thanks to advanced medical technologies and healthcare services. Nursing homes, being institutionalised nursing care, do not suit the needs of these seniors. At the same time, living in a government subsidised studio apartment in an HDB neighbourhood might not appeal to them either. We believe that Iskandar Malaysia is well-positioned as a hinterland for Singapore’s ageing population and could capitalise on this trend.
According to the InternationalLiving.com Global Retirement Index 2014, Malaysia ranks third as one of the best places worldwide to retire. The weakening Malaysia ringgit and the low cost of living are the main draws of retiring in Malaysia.
Many Singaporeans make weekly trips across the Causeway to buy groceries and other necessities. According to Johor’s Assistant Commissioner of Police Abdul Aziz Ahmad, there were 17 million Singaporean entries to Johor in 2012. It is not uncommon for seniors to seek medical treatment and prescription medicine for chronic diseases on a regular basis. They would be able to get more bang for their buck, and still obtain the same quality of medical treatment.
Moreover, housing in Iskandar is also more affordable compared with Singapore. The average condominium price in Iskandar is about one-quarter that of Singapore’s. The deal is made even sweeter with a strengthening Singapore dollar.
Adequate health care and amenities
As people age, having access to good medical care becomes crucial. Iskandar is also riding on the wave of this fast-expanding economic cluster. One key catalytic project is the Gleneagles Medini Hospital by the Parkway Pantai Group. The fully-integrated healthcare facility will feature a 300-bed hospital, nursing home and a rehabilitation centre. Half of the capacity will be operational by early 2015.
Additionally, two other flagship projects in Iskandar Malaysia jointly developed by Singapore’s Temasek Holdings and Malaysia’s Khazanah Nasional – which are worth a combined RM3 billion (S$1.2 billion) – have also hit the ground running.
Avira, a 210 acre resort wellness project located in Medini, will comprise landed residences, condominiums, serviced apartments and a commercial hub. A wellness sanctuary will be the focal point of the development, which will target residents who seek a retreat-like lifestyle all-year round away from the hustle and bustle of city life. Afiniti Medini, a 4.5 acre urban wellness project, is the second of the two developments. Located in the northern part of Medini, it will consist of a wellness centre, serviced apartments and a corporate training centre, among various things. Both projects are built with a strong focus to help boost medical tourism in the country.
A fourth notable project to be launched soon is Vantage Bay, an integrated project jointly developed by billionaire Peter Lim and Johor’s royal family. It spans 9.23 ha (13 football fields), and boasts a 75 storey condominium, a medical hub, a hotel, and retail and entertainment mall.
These projects, together with their medical components, could boost Iskandar’s attractiveness as a wellness hub targeting middle and upper-middle Singaporean retirees. Currently, Singaporeans are able to use their Medisave to help pay for their hospitalisation charges in selected hospitals in Iskandar. Should there be further opening up of Medisave to some of these healthcare services, demand will ensue.
Proximity to home
Retirement villages have not taken root in Singapore due to high land costs and operating costs. However, Iskandar, being three times the size of Singapore, does not face the same problems as Singapore. Land is abundant and manpower costs significantly lower. As a result, it is worthwhile to explore such a living concept given the ageing demographic trend in Singapore which presents huge opportunities in the foreseeable future.
In countries such as Australia, the United States and Japan, retirement villages not only cater to the residents’ health and security needs, but also provide amenities to meet their recreational and lifestyle needs. According to a survey by Grant Thornton/RVA, one of the top five reasons for Australians choosing a retirement village is proximity to their previous home. Thus, Iskandar trumps many other possible retirement destinations in the region when it comes to proximity to home and convenience.
With improved accessibility between Singapore and Iskandar with the upcoming JB-Singapore Rapid Transit System (RTS) as well as the KL-Singapore High Speed Rail (HSR), Iskandar could well be the next hotspot for such retirement options. Being away from the hustle and bustle of the city but close enough to home, retirees staying in retirement villages in Iskandar could still make regular trips on land to visit their families and relatives in Singapore. Some have even suggested relocating some manufacturing from Tuas or Woodlands together with the workers to a township in Iskandar. The township could be built with retirement villages, and seniors could retire there and still be near their families.
That said, retirement villages in Iskandar are certainly not without challenges. One main concern is safety and security in Iskandar. As seniors tend to be easy targets for theft or robbery, the image of Iskandar has to be overhauled in order for these seniors to have peace of mind.
The other worry is the skills gap. Even though manpower costs are lower in Iskandar, the more qualified could end up working in Singapore or Kuala Lumpur for higher pay. Initial operating costs could be higher than expected, especially since skilled workers are not readily available.
Last but not least, given that filial piety is a dominant social value in Singapore, cultural acceptance of retirement villages is still untested – and this could become one of the biggest stumbling blocks for such developments. Nevertheless, with a more educated and open-minded generation of older adults, demand for retirement villages could catch up in the next five to 10 years.
The ageing population in Singapore is here to stay. Land is scarce, which makes it difficult for the government to set aside more land for the ageing middle and mid-upper income Singaporeans. Given the lower cost of living and availability of medical care across the Causeway, there is no lack of demand from Singaporeans who yearn to retire in Iskandar. The key here is whether the private-sector operators in Iskandar can grasp the opportunities, provide the desired products and deliver the needs of a greying Singapore.
Christine Li is head and Wong Xian Yang is senior analyst of research and consultancy at OrangeTee
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