SINGAPORE — In a major change in direction, real estate and investment firm Rowsley, whose major shareholder is billionaire Peter Lim, announced today (Sept 22) that it will reposition its Vantage Bay project in Malaysia’s Iskandar special economic zone into a healthcare city, instead of a mixed-use lifestyle township as originally planned.

The decision was made after market sentiment was depressed by concerns of an oversupply in residential segment in the southern economic corridor, said Rowsley’s chief executive, Mr Lock Wai Han. He added that while the company could wait for market conditions to improve, as it owns the land, this change in strategy will bring in a “strong recurring income flow in the near term” for the firm.

“We could sit here and wait for the market to turn, we could sell at a lower price and move on, but rather than doing that and fight market sentiment, we decided to do something more constructive ... with (the change in strategy) we expect that in the next five to 10 years, there will be a steady stream of recurring income coming in,” Mr Lock said. 

He added that with a growing population and economy, the valuation of the freehold land is also expected to appreciate in the longer term. 

The Singapore-listed company had first proposed in 2012 to build an integrated project comprising upscale condominiums, a retail mall, a hotel, as well as offices on the approximately 9ha land. The project was scheduled to launch last year but was delayed as market sentiment weakened.

A soft property market has hit Singapore-listed Rowsley hard. It reported a 92 per cent slump in net profit in the second quarter ended June 30 this year. Its share price has also suffered, plunging 23 per cent this year. Today, the counter closed 1.3 per cent lower at S$0.148 per share.

In its new plan, Vantage Bay Healthcare City will comprise approximately 500,000sqm in gross floor area. Its gross development value is estimated to be RM5 billion (S$1.65 billion). Mr Lock said the project will take 10 years to complete, and the company will fund the investment through a mix of internal funding and bank financing.

The development of a medical hub, Thomson Iskandar, in an adjacent plot is also something the company can leverage on. The hub, by TMC Life Sciences, is also controlled by Mr Lim. Besides Thomson Iskandar, the healthcare city will house facilities such as hospitals, medical training centres, long-term care facilities and urban wellness resorts. Mr Lock said Rowsley is in talks with several healthcare service providers to be strategic investors and partners for the project’s various components. 

He added that there are “positive long-term prospects” for the health and wellness sector given the ageing population in Malaysia and Singapore, which increases demand for such services. Mr Lock noted that the number of Malaysians aged above 60 will increase from around 2.8 million this year to 4.9 million in 2030. In Singapore, the number of citizens aged above 65 will hit 900,000, he added.

Besides that, the healthcare city also stands to benefit from a growing medical tourism industry in Malaysia. Malaysia welcomed around 882,000 medical tourists last year and is targeting to hit the 1 million mark this year. “Most of them will be in Penang and KL (Kuala Lumpur) because today, Johor doesn’t have very strong facilities to support this. Once we have these facilities, we’re very confident that this will spill down into Johor, especially those from Singapore, Indonesia and beyond,” Mr Lock said.

Rowsley has received a “favourable response” from Johor’s head of state to re-conceptualise Vantage Bay, and will work out a detailed plan to submit for approval.

The Vantage Bay Healthcare City will add to Iskandar’s growing healthcare sector, which include Gleneagles Medini Hospital and Columbia Asia Hospital. However, Mr Lock said demand from the growing population in the southern Malaysian state can accommodate more players in this area.

“We’re building a whole ecosystem. At the end of the day, if we can establish the synergies within the ecosystem, it will all come together. I think the branding is important and once we have that branding, that linkage to Singapore, we will be even more attractive. The population will also increase over time and there will be a need. Today, Johor is underserved by hospitals and doctors,” he said.