Yahoo Finance Asia’s ageing crisis calls for innovative senior housing models and foreign investment
Asia is facing an ageing crisis with rising life expectancies and record low birth rates in some countries, as a result there is an increasing need for senior housing to cater to Asia’s ageing population. In a new report released today, Colliers International identified key trends in Asia’s demographic shift as well as innovative senior housing models around the globe which may be applicable to this region.
Asia’s Ageing Crisis
Asia’s senior population (aged 65 and above) will nearly triple by 2050 to 945 million. The number of people aged 75 and above will jump from 137 million to 437 million over the same period. Japan’s seniors will comprise a staggering 36.4% of the population by 2050; South Korea (35.3%), Hong Kong (33.9%), Singapore (33.6%) and Thailand (29%) representing the top five Asian economies with the highest percentages of seniors by 2050.
Mr. Govinda Singh, Executive Director, Valuation and Advisory Services at Colliers International, said, “Singapore’s greying population presents many opportunities for both policymakers and private developers to further invest in senior housing solutions. Demand for such accommodation will be also spurred by the rising awareness of healthcare and wellness benefits, and retirees having the financial capacity to take advantage of senior living services and facilities.”
The Singapore government said in January this year, that it is studying models for assisted living facilities, where senior residents can retain their independence by living at home but have access to nursing and personal care services. Assisted living offers more autonomy to the residents compared with the institutional model of nursing home care.
On May 12, 2018, Singapore Prime Minister Lee Hsien Loong officially opened the country’s first retirement community Kampung Admiralty in Woodlands – an integrated residential development with a range of healthcare, elder and childcare facilities, together with commercial space to serve residents of the area. The concept was conceived by the Housing and Development Board more than four years ago.
Senior housing in Asia
Four major categories of senior housing have emerged in Asia thus far:
– Housing developments for active seniors
– In-home care
– Assisted living facilities
– Skilled nursing care facilities
Innovative models from the West
Denver Stapleton Senior Housing w-Paratransit
Image credit: Brett VA
An integrated housing model has emerged in the US which may be applicable in the Asian context. Continuing Care Retirement Community (CCRC) provides greater convenience for seniors as this model provides the full continuum of care, from independent living to assisted living, in a single sprawling community offering recreational, social, medical and nursing facilities. CCRCs in the US relies on an entrance fee plus a monthly service fee model.
The Deferred Management Fee (DMF) retirement village model is common in the UK and most prevalent in Australia, where the senior purchases either a freehold or leasehold interest in a unit for under market rates and pays a relatively low monthly fee for the services provided.
Mr. David Faulkner, Asia Managing Director of Valuation and Advisory Services at Colliers International, said: “Perhaps the most innovative and attractive financing models for seniors, their families and developer are life care plans that require a higher entrance fee but guarantee a significant portion, up to 90% in some cases, to be refunded to the senior or their heirs.”
Outlook for Asia
The tradition of mature children taking care of elderly parents is still the norm; hiring household help is also relatively affordable in many Asian markets, leading to less demand in assisted living facilities. However, these norms may be changing due to migration trends where children move elsewhere leaving their parents behind in their home country. Therefore, the demand for continuing care senior housing is likely to grow.
Mr. Faulkner added: “Governments and developers must focus on broadening the range of senior housing options for the middle class – a fast-expanding segment throughout much of Asia. In markets where property prices are soaring, this segment may not have access to adequate subsidies or public facilities for elderly care, yet could be priced out of more expensive private offerings. As Asia ages and at the same time becomes more affluent, there will be a surge in demand for mid-range senior housing solutions, and policymakers and private developers should tailor plans accordingly.”
Senior housing is a niche property type that has moved into the mainstream of commercial real estate investing in recent years. Both institutional and private investors have been expanding into senior housing for various reasons – chief among them is the powerful demographic trend of an aging baby boomer population.
Savvy investors have been seeking exposure to retirement properties to take advantage of demand from aging populations around the world. In June 2017, Bloomberg reported that Singapore sovereign wealth fund GIC Pte was among bidders for a 50 per cent stake in LendLease Group’s Australia senior housing business and submitted an indicative offer.
There is mounting evidence that senior housing tends to be a more resilient real estate property type that does not experience the same level of occupancy swings as other asset classes during economic downturns.
Senior housing operate similar to multifamily ones, but this investment focuses on properties designed for a senior living business that offers independent or assisted living (inclusive of social activities, transportation etc.), memory care, or skilled nursing facilities.
By looking at both the pros and cons of senior housing properties, investors can determine whether adding this kind of real estate to their portfolio will be beneficial to their larger investment strategy.
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