– 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 by Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in real estate services, we identify 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
Senior housing in Asia
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. 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%).
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
An integrated housing model has merged in the US which may be applicable in the Asian context. Continuing Care Retirement Community (CCRC)
provides greater convenience for seniors as they provide 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 under market rates and pays a relatively low monthly fee for the services provided.
“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,” said David Faulkner, Asia Managing Director of Valuation and Advisory Services at Colliers International.
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.”
To download a copy of the report, visit here
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