The provider of PBWA — under the brand Westlite — has focused its attention on Penang, where it plans to add more assets to its portfolio.
“We are really looking actively in Penang, and it is all about getting a piece of suitable land. It must make economic sense for us. So, the land cannot be in the prime [industrial] areas, but close enough,” Centurion CEO Kong Chee Min tells The Edge Malaysia in an interview.
He reveals that the company is looking for a greenfield parcel for its expansion in Penang and acknowledges that finding suitable land is not an easy feat.
Centurion currently has about 3,300 beds in the state in Westlite Bukit Minyak. Notably, it undertook a sale and leaseback agreement of 15 years for its PBWA in Westlite Bukit Minyak with Kumpulan Wang Persaraan (Diperbadankan) (KWAP) last year. A similar agreement was inked with KWAP in 2024 for its asset — a 5,790-bed PBWA — in Westlite Tampoi in Johor Bahru.
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Kong says the Klang Valley and Johor are also potential areas for expansion, given the vast number of manufacturing facilities in these areas. In the Klang Valley, the company has about 6,000 beds while the bulk of its assets are in Johor, where it has 18,700 beds.
He adds that Centurion is looking for opportunities to increase the bed count in Johor, either through brownfield or greenfield developments.
“We have a piece of land in Iskandar Puteri that we are exploring for a 7,000-bed PBWA development. We are also looking at the Johor-Singapore Special Economic Zone (JS-SEZ) in terms of [potential] economic activity, and if the economic activity increases [with more manufacturing companies investing in the area], then we will have a role to play there,” says Kong.
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Centurion has expressed interest in investing specifically in JS-SEZ over the next three to five years, with Malayan Banking Bhd (Maybank) facilitating the submission of the PBWA provider’s letter of intent to the Iskandar Regional Development Authority in May.
Kong says the steep undersupply of PBWA in Malaysia has meant that the authorities have allowed shoplots and residential housing to be made into temporary housing for foreign workers, or temporary living quarters (TLQ). This means that sometimes, the requirements for liveable conditions are not met and they lack proper amenities.
The International Organization for Migration stated in a 2023 report that Malaysia, which had 2.7 million registered foreign workers in 2021, had many migrant workers living in overcrowded and substandard conditions.
“With more PBWA, the government will be able to achieve compliance under Act 446, because there’s accountability in terms of the capacity of workers in the accommodation, and it’s about their safety as well,” says Kong, adding that it will take some time before Malaysia has sufficient supply of PBWA to house migrant workers, like in Singapore. In Singapore, Centurion has about 36,400 beds in the PBWA space.
While Malaysia’s attempts to restrict the number of registered migrant workers in the country has impacted Centurion’s revenue for 1QFY2025 ended March 31, Kong is hopeful that the adverse impact is short-lived. In 1QFY2025, its PBWA revenue in Malaysia dipped by 1% to $4.8 million, with the average occupancy rate falling 14 percentage points year on year to 82% due to the freezing of foreign worker recruitment.
“We hear from our customers that they are facing a shortage of manpower right now, so we hope the government will gradually lift the restrictions again. This is not the first time the cap on foreign workers has happened. We’re hoping that it is a short-term issue, where they will eventually open it up again gradually because of demand requirements,” he says.
Centurion’s business in Malaysia largely relies on new batches of migrant workers that come into the country to work as the existing ones usually already have accommodation.
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“When new foreign workers come in, it’s easier for us to [tap that market] because the employers will place their workers straight into our dorms. But those who are already here are currently staying somewhere, usually the shoplots and other places,” Kong explains.
This could change if the government shuts down TLQ. “We will see demand go up for [accommodation for] existing foreign workers in Malaysia if the government closes down the TLQ. We are hoping that the Malaysian government supports the PBWA. Otherwise, no one would want to build the accommodation because of the uncertainty. So it is a chicken-and-egg scenario that we are facing in this industry in Malaysia,” he says.
Even so, Kong believes in the potential of PBWA in the Malaysian market, where the shortage of such accommodation presents an opportunity for the company to expand further. “We want to have the first-mover advantage of putting in workers’ accommodation in the right place and at the right time in order to meet demands,” he says.
While the bulk of Centurion’s revenue is derived from PBWA, the company is also in the business of providing purpose-built students’ accommodation (PBSA) in Australia, the UK, the US, Hong Kong and China. It also entered into a new asset class of the built-to-rent (BTR) segment in Xiamen, China, where it secured a 20-year master lease of 400 apartments in 2024.
In FY2024, Centurion’s total revenue amounted to $253.6 million, with $194.6 million coming from its PBWA segment. Singapore was the key contributor at $176.1 million while Malaysia contributed $19.27 million. PBSA contributed $58.2 million to its revenue.
For its PBSA, Centurion plans to increase the number of beds in Australia and the UK, where it currently has 879 and 2,786 beds respectively.
While the company seeks to expand its portfolio in both PBWA and PBSA, it is cognisant of its limited funds and mindful that its gearing is currently at 30%. This is where its plans for a REIT come in.
Its plans for a REIT, which were announced earlier this year, could be put in motion within a year. But, as Kong says, they are largely dependent on factors such as market conditions and regulatory approvals, as is the case with any initial public offering.
In an announcement to the Singapore Exchangeon June 10, Centurion said it had submitted the listing application for the proposed IPO for the REIT to the stock exchange regulator, as well as various applications to the Monetary Authority of Singapore, and they are now under review.
The REIT would help the company scale faster as the strategy is to divest a certain amount of assets to the REIT in exchange for property management fees, which provide a better return on equity, says Kong.
“It is also part of our asset-light strategy, where there is an exit for us. We can put the assets in the REIT. From it, we will be able to recycle capital and keep on growing,” he adds.
“The REIT will need to be sizeable. While only selected assets from Centurion will be divested there, there are some other assets that are not only from Centurion that will go into the REIT as well.”
If the plans come to fruition, the REIT could be the first of its kind in Southeast Asia, offering investors exposure to the PBWA market.
