MAINBOARD-LISTED dormitory operator Centurion Corporation has been given the go-ahead to increase the bed capacity at its quick-build dormitory (QBD) sites, as supply remains tight.

 

Centurion Corporation chief executive Kong Chee Min said the company has received approval from JTC to add 888 more beds at its Westlite Jalan Tukang and Westlite Tuas Avenue 2 dormitories, two QBDs that began operations in 2021.

 

QBDs are temporary structures built during the pandemic to create additional bed space for migrant workers.

 

Centurion has a lease term of three years at the two sites, with an option to extend the lease by a year after that.

 

The company operates five purpose-built dormitories (PBD) with 27,530 beds, and four QBDs with 6,368 beds. An average of 97 per cent of its rooms were leased out for the year ended Dec 31, 2022.

 

QBDs were at first required to provide workers with 6 sq m of living space per bed, but new regulatory specifications mandate only 4.2 sq m of space.

 

Kong said that, by adjusting the current configuration of the rooms, each apartment unit will be able to house six residents, up from the current five.

 

The company will have to pay more for its master lease and incur expenditure on refurbishment works, but it believes it is & ldquo financially sensible and viable& rdquo to go ahead, noted head of communications David Phey.

 

He added, however, that given that the assets have a fairly short lease remaining, and costs have to be incurred, & ldquo the revenue uplift is not a lot& rdquo .

 

For the full-year ended December 2022, Centurion& rsquo s earnings rose 36 per cent to S$71.4 million its revenue came in 26 per cent higher at S$180.5 million.

 

The company is hoping that the continued constraints on dormitory supply will make the authorities more willing to extend the leases of the QBDs.

 

Phey said: & ldquo It may be a bit early to speculate, but I think that unless there is a faster solution to meeting the demand, there would have to be other means of keeping the bed supply stable until the new dormitories are developed.& rdquo

 

Centurion& rsquo s joint venture with construction company Lian Beng Group received approval to build a 1,650-bed PBD in January, but construction on this dormitory is expected to be completed only in 2025.

 

The PBD will have a 30-year land lease, and be the first to be developed by the private sector under the new regulatory specifications announced by the Ministry of Manpower (MOM) in September 2021, Kong said.

 

Centurion launched a & ldquo spare beds& rdquo programme in February to alleviate a supply crunch, after consulting with MOM and other industry associations.

 

Under this programme, employers can return leased but unoccupied beds. If the beds are successfully reassigned, employers receive a 50 per cent rebate for the committed bed rental, and S$50 a month for adjusted utilities consumption.

 

Employers who require the bed space are to give Centurion seven days& rsquo notice if they require those beds again.

 

The number of work permit holders in the construction, marine shipyard and process sectors went up to 415,000 last December, up from the December 2019 (pre-pandemic) levels of 370,100.

 

Increased numbers aside, rising rental rates in private residential facilities have also contributed to the demand for beds. Some employers are not legally required to house workers in approved dormitories, but high rentals in private residential facilities have pushed them to seek beds in PBDs, Kong said.

 

Post-pandemic, dormitories are now required to set aside a higher ratio of beds for workers who are ill and need to be isolated. This has also hit supply.

 

Phey said some smaller players have exited the market, with the new Foreign Employee Dormitories Act (Feda) coming into force. The Act requires operators who have at least seven beds to be licensed, a sharp drop from 1,000 beds before.

 

This confluence of surging demand, tight supply and inflationary pressures has led to a rise in rentals at PBDs.

 

Phey estimated the market rate of a PBD bed to be now between S$380 and S$520, up from between S$250 and S$280 per month.

 

He added that Centurion has increased its prices where necessary, but is not & ldquo pricing at the top of the market, because it& rsquo s also about employer sustainability& rdquo .