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The S11 dormitories along Seletar North Link (S11 Dormitory @ Punggol) and Tanah Merah Coast Road (Changi Lodge II) came under the spotlight earlier this year when they were one of the earliest dormitories to produce Covid-19 clusters.
The then-rapidly growing number of Covid-19 cases reported in migrant worker dormitories prompted renewed calls for better dormitory living conditions and overall better treatment of migrant workers themselves in Singapore.
Three months on, migrant worker dormitories are still under lockdown. However, the government is set to clear all the workers in the dormitories by this week and has promised to bring up the standards of migrant worker dormitories.
And so Mothership caught up with Jonathan Cheah, founder of S11 Group which manages the Changi Lodge II and S11 Dormitory @ Punggol, to better understand what goes into running a migrant worker dormitory in Singapore.
Razor-thin margins in dormitory industry
Squeezing 10 to 12 workers in a room is quite the norm because of the razor-thin margins that dormitory operators earn.
The dormitory industry might appear big, says Cheah, because of the sheer size of the migrant worker population but the truth is there are only a handful of players in this industry.
A lot of the revenue — Cheah estimates this to be about 60 to 70 per cent — goes into rental for the land.
"So if you collect $1 basically 60 cents go to the government. Straight off for land rent. That excludes the cost of construction. The cost of construction is something that you recover over a period of time."
Utilities account for a smaller, but not insignificant chunk — about 20 to 30 per cent — of revenue, says Cheah.
Part of this goes to paying, for instance, a staggering S$250,000 water bill every month at the Punggol dormitory. This amount is after optimising cleaning activities and having a water recycling system. This is one his biggest monthly expenses after deducting land rental.
In 2015, Cheah told The Businesss Times that his Changi Lodge 2 generated an annual revenue of S$15 million. The paper also reported that the Punggol Lodge would bring in an annual revenue of S$55 million when operating at full capacity.
Costs are up
So five years on, are Cheah's dormitories bringing in S$70 million (or more) in revenue?
"No, definitely not. I think with Covid-19, it is definitely not the case," he says.
Now that many construction companies aren't able to proceed with their projects, they face cash flow problems which mean that dormitory operators like Cheah aren't getting paid.
Cheah himself estimates that his revenue has fallen 60 per cent.
Having more workers quarantined in the dormitories means that utilities, cleaning, and refuse collection — all of which increase the cost of running a dormitory — also went up.
He estimates that utilities cost has gone up by 100 per cent ("Because now they use the toilets more often, they bathe more often.") while refuse collection has increased by three to four times.
Having more duty personnel on the ground to coordinate medical workers and food distribution has also contributed to another 50 to 150 per cent increase in manpower costs.
https://mothership.sg/2020/08/dorm-operator-s11-jonathan-cheah/
The then-rapidly growing number of Covid-19 cases reported in migrant worker dormitories prompted renewed calls for better dormitory living conditions and overall better treatment of migrant workers themselves in Singapore.
Three months on, migrant worker dormitories are still under lockdown. However, the government is set to clear all the workers in the dormitories by this week and has promised to bring up the standards of migrant worker dormitories.
And so Mothership caught up with Jonathan Cheah, founder of S11 Group which manages the Changi Lodge II and S11 Dormitory @ Punggol, to better understand what goes into running a migrant worker dormitory in Singapore.
Razor-thin margins in dormitory industry
Squeezing 10 to 12 workers in a room is quite the norm because of the razor-thin margins that dormitory operators earn.
The dormitory industry might appear big, says Cheah, because of the sheer size of the migrant worker population but the truth is there are only a handful of players in this industry.
A lot of the revenue — Cheah estimates this to be about 60 to 70 per cent — goes into rental for the land.
"So if you collect $1 basically 60 cents go to the government. Straight off for land rent. That excludes the cost of construction. The cost of construction is something that you recover over a period of time."
Utilities account for a smaller, but not insignificant chunk — about 20 to 30 per cent — of revenue, says Cheah.
Part of this goes to paying, for instance, a staggering S$250,000 water bill every month at the Punggol dormitory. This amount is after optimising cleaning activities and having a water recycling system. This is one his biggest monthly expenses after deducting land rental.
In 2015, Cheah told The Businesss Times that his Changi Lodge 2 generated an annual revenue of S$15 million. The paper also reported that the Punggol Lodge would bring in an annual revenue of S$55 million when operating at full capacity.
Costs are up
So five years on, are Cheah's dormitories bringing in S$70 million (or more) in revenue?
"No, definitely not. I think with Covid-19, it is definitely not the case," he says.
Now that many construction companies aren't able to proceed with their projects, they face cash flow problems which mean that dormitory operators like Cheah aren't getting paid.
Cheah himself estimates that his revenue has fallen 60 per cent.
Having more workers quarantined in the dormitories means that utilities, cleaning, and refuse collection — all of which increase the cost of running a dormitory — also went up.
He estimates that utilities cost has gone up by 100 per cent ("Because now they use the toilets more often, they bathe more often.") while refuse collection has increased by three to four times.
Having more duty personnel on the ground to coordinate medical workers and food distribution has also contributed to another 50 to 150 per cent increase in manpower costs.
https://mothership.sg/2020/08/dorm-operator-s11-jonathan-cheah/
