Four years after venturing into China’s healthcare sector, Pua Seck Guan, CEO of Singapore-listed integrated real estate and healthcare company Perennial Real Estate Holdings Ltd, has set his sights on eldercare as the firm’s biggest growth area in its medical business – targeting the upper middle income group via a step-down care model.
Pua is also banking on business travellers and medical tourism within China, building integrated developments near high-speed rail (HSR) stations in four cities, mostly provincial capitals – Chengdu, Xi’an, Tianjin and Kunming.
The three developments in Xi’an, Tianjin and Kunming are expected to house international hospitals with step-down care, and are to be progressively completed within the next three years or so.
The one in Chengdu has as its anchor tenant Gleneagles Chengdu Hospital – which just had its soft opening at the weekend – among other facilities.
Pua expects to seal the deal on four more integrated projects in the next two years in other provincial capitals. But he declined to reveal the expected locations.
About 70 per cent of the company’s portfolio is in China now, and Pua told the Straits Times in a recent interview that he does not rule out increasing this share.
“We are not catering just to the city itself, but hope to also cater to the province,” he said.
Each capital city is trying to grow by attracting foreign investment and multinational corporations, he added, noting that senior executives, for example, would want private healthcare services that current hospitals may not provide.
While Perennial saw its net profit plunge 74.9 per cent to S$2.2 million (US$1.6 million) in the second quarter from a year ago, Pua said results are likely to be better from next year, with an expected boost from the revamped Capitol Singapore and more tenants starting operations in the Perennial International Health and Medical Hub in Chengdu by the year’s end.
Perennial’s net profit fell in the second quarter mainly due to higher net finance cost, attributed to higher interest rates and added loans to fund new investments.
‘Our business model is not that’
Last year, Perennial and its partners set up a $1.2 billion joint venture vehicle to acquire and develop mixed-use developments connected to HSR stations. Pua said the developments may operate on different models.
The Chengdu hub, for example, has an anchor tenant, the 350-bed Gleneagles Chengdu Hospital. The rest of the space is taken up by smaller medical and healthcare service providers such as aesthetic and rehabilitation hospitals, as well as retail shops. Pua said the take-up rate is more than 90 per cent.
Another model involves Perennial bringing in a host of medical groups of various specialities, then organising and running the entire international hospital, he said.
Other Singapore healthcare providers in China include Raffles Medical Group, which opened its first hospital there – in Chongqing – in January, with plans to open a second one in Shanghai by the end of this year.
But Pua believes Perennial can differentiate itself from other healthcare providers. “Many medical groups do a standalone hospital, but our business model is not that.”
It wants to stand out from other real estate developers as well.
Beyond owning and operating commercial real estate, he said the firm has gone into the hospitality and medical sectors, with partners in the areas of maternity, aesthetics and traditional Chinese medicine.
“When the [Chinese authorities assess] our project, they know we don’t just invest in an empty shell, but have content to bring over.”
Perennial’s move into eldercare came from wanting to make better use of the real estate it owned near mixed-use projects, leading to a joint venture with Renshoutang, one of then-largest private eldercare home operators in Shanghai, he said.
Perennial is the largest single shareholder of Renshoutang, owning close to 50 per cent of its shares.
While Renshoutang – its eldercare business arm in China – had about 2,000 beds three years ago, the number is now 15,000 and set to rise by at least 5,000 annually for the next four years or so, Pua said.
“Eldercare is the biggest growth area, because of the huge demand from the ageing population.”
A typical eldercare facility by the firm has 900 or so beds – a third for elderly folk still relatively healthy, a third for those who need assistance and a third for those who need nursing care.
“As their condition deteriorates, they just have to move to the next block,” Pua said.
He added that he is not too concerned about fallout from the Sino-US trade war, which has hit the yuan. “This is our long-term business, and we’re not going to be deterred by short-term fluctuations of currency.”
THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK