Vanke se­nior care for fu­ture growth

China Daily (Hong Kong) - - BUSINESS - By HU YUANYUAN huyuanyuan@ chi­nadaily.com.cn

Vanke, the coun­try’s largest prop­erty de­vel­oper in terms of mar­ket value, has branched out into se­nior cit­i­zen care ser­vices.

In fact, the re­alty be­he­moth sees the seg­ment as one of its fu­ture growth en­gines. That is be­cause the tra­di­tional real es­tate sec­tor has been slow­ing of late.

The com­pany re­cently un­veiled its am­bi­tious plan for the se­nior care in­dus­try. Called the Dig­ni­fied Life Project, it in­cludes the coun­try’s first se­nior care in­dus­try ecosys­tem in the Yangtze River delta area.

“Over the next three years, the Dig­ni­fied Life Project will set up 1,000 branches, cov­er­ing more than 600,000 se­nior peo­ple with over 50,000 di­rect clients,” said Li Wei, gen­eral man­ager of Vanke’s Hangzhou unit.

The project con­sists of three lines: apart­ments for se­nior cit­i­zens who can look af­ter them­selves; a fam­ilystyle el­derly re­ha­bil­i­ta­tion nurs­ing cen­ter; and a com­mu­nity ser­vice cen­ter for se­nior cit­i­zens.

Seven years ago, Vanke Hangzhou set up a “Dig­ni­fied Life” project in Liangzhu, a scenic spot 16 km from Hangzhou in East China’s Zhe­jiang prov­ince. The com­mu­nity cov­ers about 63,000 square me­ters. There are 615 se­nior care apart­ments, a nurs­ing home with 122 beds, and com­mu­nal ameni­ties like a hos­pi­tal, banks and a su­per­mar­ket.

Such apart­ments are rented out for a long pe­riod, and not sold out­right. Typ­i­cally, the 15-year rent for a twobed­room apart­ment works out to around 1 mil­lion yuan ($143, 000), and the monthly ser­vice fee starts at 2,000 yuan and can go up to 3,000 yuan.

The group has em­ployed 200 peo­ple for the se­nior care busi­ness unit that can serve 100 com­mu­ni­ties, ac­cord­ing to Li.

Al­though seen as one of the fu­ture growth en­gines, the new line of busi­ness is not driven by the profit mo­tive, said Zhang Hai, se­nior vice-pres­i­dent of Vanke.

Nor is there any plan to go pub­lic right away, though po­ten­tial op­por­tu­ni­ties to do so abound, said Zhang. “We need to con­sol­i­date our busi­ness first. We’re not do­ing se­nior care real es­tate, but se­nior care ser­vices. The cap­i­tal mar­ket foray will usu­ally lead to short-term be­hav­ior, which is def­i­nitely not what we want.”

China’s fast-grow­ing ag­ing pop­u­la­tion is a huge mar­ket for se­nior care ser­vices, he said, cit­ing in­dus­try data that the el­derly pop­u­la­tion will reach 260 mil­lion in 2020, al­most near­ing the to­tal pop­u­la­tion of the United States.

By the end of 2015, those aged 65 and above ac­counted for 10.5 per­cent of China’s to­tal pop­u­la­tion of 1.37 bil­lion, sur­pass­ing the global av­er­age of 8.5 per­cent.

Ac­cord­ing to Wu Xiaobo, a fi­nan­cial writer, the se­nior care in­dus­try will be­come China’s big­gest in­dus­try with over 10 tril­lion yuan mar­ket value in 13 to 15 years, re­plac­ing the real es­tate in­dus­try.

“The se­nior care ser­vices are just a part of Vanke’s over­all prop­erty ecosys­tem,” said Zhang. “The se­nior care sub­sys­tem can be mainly di­vided into three lev­els. First, to es­tab­lish the net­work lay­out with three ma­jor prod­uct lines; sec­ond, to set up the Dig­ni­fied Life plus co­op­er­a­tive eco­log­i­cal platform, in­clud­ing co­op­er­at­ing with med­i­cal ser­vice providers and equip­ment sup­pli­ers; third, to build an ex­tendible eco­log­i­cal ser­vice in the fu­ture.”

Tian Yuanyuan con­trib­uted to this story.

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