The megatrend of ageing populations is something that is challenging cities all over the world. It’s pressing nature means we’re facing a situation where we will soon have more people at extreme old age, than young people. Other than the obvious health, social and wellbeing questions, there is a need to understand the impact this will have on a city’s real estate.
For Hong Kong, where buildable land and new buildings come at a premium, there are concerning conversations around living options for the elderly, such as do we put senior citizens at the forefront of design, do we have enough existing fit-for-purpose assets to cope with this rising demand, and are the private and public sectors collaborating to find the right solutions?
As a quick answer, Hong Kong’s senior citizens have limited options. The current supply is low, and the future pipeline of developments doesn’t meet projected demand. However, this presents an opportunity for the government to invest, and for private operators, developers, and investors to step into a sector that has high demand, financial stability, and is relatively dormant.
To frame this conversation and opportunity, we need to state there are two main categories of products to consider, which shape the potential for real estate stakeholders:
1. Residential Care Home for the Elderly (RCHE)
- This asset type is typically government funded and targets lower, and lower-to-middle class groups, providing a basic-standard of care. There are private models, but all RCHEs must meet the licensing requirements of the Social Welfare Department (SWD) in providing an acceptable standard of care.
- The government has committed considerable resource into RCHEs, directly through subsidised care, and indirectly through financial investment. However, the historical supplement of create units has resulted in constrained market activities, and insufficient collaboration between the public and private sectors.
2. Senior Living:
- Traditionally, senior living is a private venture that is built for the middle-class, and above all else, has the primary objective to provide privacy and autonomy to its tenants – the elderly.
- For the more affluent, quality senior living is an innovative solution that creates an improved standard of living with private access to facilities and amenities. However, this concept is very limited in the market, demonstrating the potential for investors and operators to look at purpose-built senior living solutions.
What options does Hong Kong currently offer for senior living?
Prior to 2015, Hong Kong only had two purpose-built senior living developments for senior citizens, with only two additional high-end developments being completed up to 2019. Looking at this through Hong Kong’s progression, the below outlines the senior living options for the elderly in Hong Kong:
1. Hong Kong Housing Society-Senior Citizen Residences Scheme (SEN)
Launched in 1999, the SEN was the first-of-its-kind senior living pilot scheme in Hong Kong that targeted the middle-class. It looked to establish autonomy for the elderly by integrating housing, recreation, medical and healthcare services. Two notable projects have been completed under this scheme, Jolly Place in Tseung Kwan O, and Cheerful Court in Ngau Tau Kok, which provide a combined total of 576 studio and one-bedroom residential units.
SEN units are let to residents under a "long lease" arrangement. After paying an entry contribution that ranges from HK$775,800 to HK$1,901,800 depending on unit types and residents’ age, residents don’t have to pay any further rent and only have to contribute to a monthly management fee, and a basic-package service fee.
2. Tanner Hill – Hong Kong Housing Society
An evolution of the SEN, Tanner Hill is a non-subsidised senior living project in North Point that offers 588 units for lease to eligible seniors who are older than 60 and hold Hong Kong permanent residency. Tenants have two leasing options in Tanner Hill, which offers improved flexibility, of long and short leases:
- Long lease – life-time residency
The long lease requires the applicant to submit an entry contribution, which can be paid by lump sum, a one-year payment plan, or a 10-year payment plan. The amount would decrease with age for tenants who are between 60 – 85 and remain constant for those 85 or older.
- Short lease – two-year fixed term tenancy
Tenants pay monthly rent, meaning they don’t need a termination refund. Currently, management and service fees are waived, but this is subject to review and may be adjusted from time to time.
3. Patina - Pine Care Group & Tang’s Living Group
Patina offers senior living integrated into a wellness hub and offers 79 luxury residences with balconies and unobstructed city views. Rather than a “long lease” plan, the operator offers flexible package terms, where tenants only pay monthly. The payment includes a fully furnished accommodation, and free access to clubhouse facilities. Rent starts at HK$26,000 and if needed, housekeeping and nursing services are available at HK$1,500 and HK$2,500 per month, respectively.
4. Ventria Residences - Hong Kong-Macao Conference of Seventh-Day Adventist & Chevalier Group
The latest in the evolution of senior living, Ventria will be in Happy Valley and is expected to be completed in 2022 and aspires to pioneer the market to lead innovations in the elderly care sector. As the first medi-hotel retirement community in Hong Kong, Ventria Residence is setting new standards and redefining senior housing. The development also looks to embrace human-centric technology, ranging from voice-control in-room amenities and motion sensors to a companion butler-like robot in each unit.
Currently, the senior living market could be considered as a sleeping giant in terms of asset development in Hong Kong. With a global megatrend of an ageing population being reflected in the Hong Kong market, the opportunity for real estate developers, operators, and investors to enter this sector is relatively untapped, despite it offering major potential for stable returns.
To #SeeWhatCouldBe for you in the senior living sector, talk our experts Hannah Jeong, Stella Ho, and Winter Ren, today. Or, register to receive our upcoming publication that will explore Hong Kong’s senior living sector by analysing performance of private sector developments, rental income, and the overall business model, by clicking HERE.