Perennial Real Estate Holdings Ltd., periodically makes the news for opportunistic real-estate deals:  think Katong Mall, TripleOne Somerset, AXA Tower …

Exciting as these deals are, the outlook for the company was clouded by the uncertainty over their projects in China. Perennial is developing large tracts of real-estate in Chengdu, Xian, and Beijing and investors were spooked by the lengthy gestation and execution risks.

Investors recognized that Perennial would book huge profits on completion of the project but they were spooked by the execution risks.

The disquiet was not wholly unfounded as Perennial’s strategy at least initially, seemed to be ‘build-and-they’ll-come’!  This was particularly true, at the time, of their projects at Chengdu and Xian.

Where others saw a problem, Perennial spotted an opportunity!
About two years ago, Perennial announced its entry into the healthcare services business. The move raised eyebrows but it turns out that healthcare is a surprisingly good fit for their integrated developments in China.

With its entry into healthcare services, Perennial is at the sweet-spot between real-estate and healthcare.

Since Perennial was new to healthcare it partnered with well-established companies to get the business off from a standing start. They also fitted out their properties to suit the new business and appointed a healthcare professional to manage it.

Chengdu is where the rubber meets the road!
Chengdu is where the rubber meets the road; it is where Perennial’s vision for their healthcare business will come to fruition. The first phase of the project is a spanking new 280,000 sqm building which houses the Perennial International Healthcare and Medical Hub. The Hub, which is directly linked to Chengdu East HSR and the Long Distance Bus Interchange, has an estimated 100 million living within a 120-minute travel.

Perennial’s integrated real-estate and healthcare strategy will create multiple revenue streams. Besides profits from its healthcare business, it will also earn fees from owning and managing the property.

Perennial has lined-up an impressive suite of tenants for the Hub. IHH’s ParkwayHealth Chengdu Hospital is the anchor tenant while BGI Genomics, the specialist in genome sequencing; and Care Alliance Rehabilitation & Nursing Centre, the Sino-Swedish medical group are the mini-anchor tenants. Perennial Healthcare is present through its St Stamford Plastic Surgery, AND Maternal and Child Centre, and Perennial Specialist Medical Centre. Operations at the Healthcare Hub will commence progressively through the second-half of 2018.

Coming up on an adjacent plot are six 35-storey tower blocks planned for eldercare and retirement housing. It will be run by Renshoutang – a Perennial associate, and open in 2H18.

Xián will be next!

Perennial is developing two plots adjacent to the Xi’an North HSR Station. The first plot is a commercial development which Perennial has decided to hold as an investment-property. The second plot is approved for  healthcare where Perennial plan to replicate their integrated real-estate and healthcare model. The development in Xi’an is scheduled to commence business in phases beginning  2020.

Perennial’s entry into Healthcare appears to have gone smoothly so far. Although it will be several quarters before Healthcare’s contribution to the bottom line is known, it has already lifted the clouds over Chengdu and Xian.

Perennial offers the best of real-estate and healthcare!

There is no doubt that real-estate will remain Perennial’s core-business, but the combination of real-estate and healthcare compounds the value on offer. The recurring income from healthcare along with hefty spurts from its real-estate deals would be a heady mix.

Perennial is a standout investment when one considers that Chengdu and Xi’an will stabilize and contribute to the bottom-line just as their blockbuster developments in Tongzhou and Zhuhai near completion.

Perennial is a standout investment when one considers that Chengdu and Xi’an will stabilize and contribute to the bottom-line just as their blockbuster developments in Tongzhou and Zhuhai near completion.

Perennial chief executive Pua Seck Guan discusses the move into China Healthcare, explains why they chose to partner with Guangdong Boai Medical Group, and how their partnership with Renshoutang is opening up new opportunities in eldercare.