Ong and Seet write in their Mar 28 report: “In 2Q2025, about 9,000 dormitory beds will be taken out of local supply as the lease to operate one of the larger dorms by its competitor will not be renewed.”
Centurion’s management also anticipates a further supply squeeze by 2027, when dorms must meet upgraded interim standards under the MoM’s Dormitory Transition Scheme (DTS).
With this, the analysts see that the group’s dorms at Westlite Toh Guan and Westlite Mandai can serve as ‘swing sites’ during such transition shifts.
Meanwhile, the group also has plans to develop some 7,000 beds in Malaysia including Nusajaya, Iskandar and Johor, to which Ong and Seet note could potentially benefit from the set-up of the Johor-Singapore special economic zone (JS-SEZ).
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On Centurion’s student accommodation portfolio, there are plans for expansion in Australia and the UK.
“Universities in the UK are growing their international student numbers, which should spur demand. In Australia, there is also an ongoing shortage of beds and the group is looking to further increase its bed count in Melbourne and Sydney,” write Ong and Seet.
The group has also established two joint-ventures (JVs) for built-to-rent (BTR) projects in Xiamen, China. These JVs follow a property development model where buildings are specifically constructed or retrofitted for long-term rental accommodation purposes.
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Overall, the analysts see that the demand-supply dynamics in the specialised accommodation sector continue to support positive rental rate revisions for Centurion. The group is also seeking scalable growth via JVs and an asset-light strategy, as well as selectively growing its portfolio through accretive mergers and acquisitions (M&As) in existing and new markets.
They conclude: “Additionally, the group is exploring a transaction involving the establishment of a REIT and also considering to effect a dividend in specie of some of the units in the proposed trust to reward shareholders.”
Upside factors noted by them include better-than-expected financial occupancy, rental rate reversion for the group’s accommodation assets, potential capital recycling exercises to generate higher returns and lastly, the aforementioned portfolio expansion via asset-light strategy in existing and new markets. Conversely, downsides include an oversupply of beds resulting in higher vacancy rates, lower-than-expected margins from intense competition and finally, a deterioration in the macroeconomic environment.
As at 2.19 pm, shares in Centurion Corporation are trading 4 cents lower or 3.20% down at $1.21.
