2012 Asia Pacific Summit
By 2050, there will be more over-60s in China than there are people in the United States—that’s 450 million. Even today there are nearly 180 million, and social and demographic pressures mean that Chinese senior citizens cannot be cared for by their children in the Confucian tradition; the one-child policy means a couple could be responsible for four parents and eight grandparents.
A panel of experts at the Urban Land Institute’s Asia Pacific Summit, held in Beijing last week, found much to discuss but also found it difficult to provide conclusions as to how the market should or would develop. At present there is a network of private and state retirement homes across China, with some state care provided by local authorities and charities, often religious, accounting for a significant proportion of private care.
“Senior housing is still a relatively new concept for China and there still needs to be regulation of the role of senior housing projects,” said panel moderator Zhang Xuezhou, chairman of the Jing Rui (China) Real Estate Research Institute.
Tony Wang, managing director of Belmont Village Senior Living Hong Kong, argued that China is like the United States was in the 1980s with regard to the retirement homes market. Like a number of other U.S. companies, Belmont is attempting to export its model to China and currently has an advisory role for a Shanghai senior housing project.
However, the gap in income between China and the United States makes the comparison much less straightforward, bearing in mind that senior housing is a sector that many in the United States have failed to make pay. The sector has a broad spectrum: from providing communities for the “active elderly” who do not need care, to the very old and frail who need nursing support.
In China, senior housing projects do not take account of the exact needs of seniors, said Sun Xiangshu, chairman of Beijing Victory Star Architectural & Civil Engineering Group. Even more worryingly, he said that developers were starting to look at senior housing because they saw it as a way to use unsold residential developments and as a sector that would get government support.
Government subsidies are available, and range from RMB8,000 to RMB10,000 (US$1,265 to US$1,580) per unit as well as monthly subsidies of RMB200 to RMB300 (US$32 to US$48) per resident, said Zhu Fengbo, chairman of Beijing Sun City Senior Housing Group. However, he conceded that even with subsidies, profits were small and that it could take up to eight years to get a return on investment.
Chinese insurance companies are looking to get involved in the sector, which could help it garner long-term funding, said Nie Meisheng, president of the China Real Estate Chamber of Commerce (CCREC), which has been studying various models for the sector in China but has found no easy answers. “Providing units for sale for the prosperous over-55s is one thing, but how do you provide for those who are frailer or on lower incomes?” she asked.
The subject is a sensitive one, particularly in a culture where respect and consideration for the elderly are socially hardwired. “People panic over the risk of going into or putting their parents into senior housing,” she added.
The Chinese model is likely to end up being different from that used in the United States and Europe. The CRECC is studying Japan and Taiwan to see how they deal with similar demographic and cultural issues. Panelists suggested that future developments might provide a mix of accommodation for different age groups, so that families could live close to their parents. There may be an opportunity to mix leisure developments with senior living, to cater to visitors.
The panel’s main conclusion is that there will be no easy solutions to China’s aging problem. “This is a social issue, not just an economic one,” said Nie.
ULI–the Urban Land Institute