Real estate and architecture firm Rowsley has unveiled plans to convert its Iskandar Malaysia township project Vantage Bay into a healthcare city.

The decision announced yesterday marks a new turn for Rowsley's venture in the special economic zone in Johor, where multiple developments, including Vantage Bay, are stuck in limbo amid an housing oversupply that has dampened demand.

The new project, called Vantage Bay Healthcare City, will be a RM5 billion (S$1.65 billion) development comprising six major components, including a specialist and a community hospital, a medical institute, a wellness resort, service apartments for medical tourists and a wellness-themed mall.

Rowsley chief executive Lock Wai Han sees strong market potential for the new project as demand for healthcare services is set to rise in the region because of demographic changes.

"(The number of) Malaysians aged 60 and over will double in 15 years, and the same age group will be 20 per cent of Singapore's population in... (the same) 15 years," he said yesterday.

He added that the number of medical tourists visiting Malaysia is set to hit one million this year.

Rowsley's healthcare city will be the southern hub for medical tourism, which is centred around Penang and Kuala Lumpur.

The company is in talks with several medical and healthcare operators in the region to explore partnerships that will eventually run the new city's facilities.

"We expect the project to be completed over 10 years in different phases. One of the first things you'll see there is Thomson Iskandar, which will start construction quite soon, and that's the heart of the project," Mr Lock said, adding that Rowsley will focus on creating synergy between both projects.

Thomson Iskandar is a specialist hospital to be built on a site adjacent to the Vantage Bay land.

The project is owned by TMC Life Sciences and will be managed by Singapore's Thomson Medical when it is completed in 2018.

All three entities - TMC, Thomson and Rowsley - are controlled by Singapore tycoon Peter Lim.

The conversion of Vantage Bay's 9.23ha freehold waterfront land into a healthcare hub further highlights the stagnation in Iskandar's property sector. But Mr Lock stressed that the decision was not made out of fear of a housing glut.

"We feel that the oversupply concerns were a bit overblown," he said. "The projects in the pipeline there will not hit the market in two or three years; they may take 10 or even 20 years to develop. The population also will take time to catch up."

But the fear that a property bubble could burst has greatly weakened sentiment, he admitted, adding that the company decided to move on even though Rowsley is in no rush to push the site onto the market.

As Rowsley acquired the Vantage Bay site via share issuance, it did not incur any debt over the land.

"We can sit and wait for the market to turn. But rather than trying to fight the market sentiments, let's do something more constructive where we can leverage on partners," Mr Lock said.