Source : Business Times - 3 Apr 2009
AVERY Strategic Investments (ASI), a Morgan Stanley-controlled property venture, has launched Avery Lodge, a six-storey ‘upmarket’ foreign worker dormitory at Jurong.
The $100 million project includes a canteen, mini-mart and gymnasium, with a clinic to be opened later. On a two-hectare site and able to house up to 8,000 workers, it is Singapore’s biggest foreign worker dormitory. Vernon Chua, managing director of Averic Capital Management, which has a 3 per cent stake in ASI and is asset manager for the venture, said that the firm is on the lookout for similar investment opportunities.
The market can take more developments like Avery Lodge, he said, adding that occupancy rates at the firm’s dormitories are healthy.
80 per cent of available accommodation at Avery Lodge has been taken up, while the three other dormitories in ASI’s portfolio, which were acquired from JTC Corp in 2007, are at least 90 per cent occupied.
‘Demand for such housing will continue to grow, especially given the inflow of foreign workers contracted to the integrated resorts,’ Mr Chua said.
Demand need not necessarily be driven by new arrivals, he noted. Companies may choose to relocate workers already in Singapore, but housed in ‘less-than-ideal’ accommodation, to better facilities such as Avery Lodge, which charges a 5-10 per cent premium over the prevailing market rate.
Craig Pearce, vice-president of Morgan Stanley Real Estate, said that the dormitory sector is resilient and unlike other real estate asset classes, it has not suffered ‘a major dive in income stream’.
Also unlike other types of property, there is not a large oversupply of dormitory facilities in Singapore, he added. Down the track, Morgan Stanley may consider an exit strategy such as sale to a private purchaser or industrial Reit, Mr Pearce said.
But Mr Chua said that an exit strategy will not be implemented right away as ‘the market right now is not conducive’.
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