As China ages, investors bet they can beat retirement home stigma
Shanghai: Investors are betting big on a major attitude shift among elderly Chinese - that they will warm up to retirement homes as the world’s most populous country ages and smaller families struggle to support parents and grandparents.
Who takes care of the elderly in China, where pensions are tiny, is one of the major headaches policymakers face as they deal with the first demographic downturn since Mao Zedong’s Cultural Revolution.
Costly nursing homes are out of reach for most elderly and are generally frowned upon, with many judging the use of such facilities as a sign children are not fulfilling their duties.
But the hope of companies investing in the sector in China is that those attitudes will change soon, and fast - at least among the small percentage of elderly who got rich before they got old. China’s 1980 to 2015 one-child policy means smaller families are expected to support the old folk, some of whom would have no choice but to seek professional elderly care, investors say. “You have one child with two parents and four grandparents. To take care of so many people becomes more challenging,” said Louis Lim, chief executive of Singapore-based Keppel Land (KPLM.SI), which is building a 400-bed retirement property in Nanjing that is due to open this year.
Lim says “stigma” around retirement homes in China is quickly disappearing.
The National Development and Reform Commission - the top state planner - and the Ministry of Human Resources and Social
Security did not immediately respond to requests for comment.
Total investment in China’s senior living market - including housing, caring and equipment - by both public and private entities was about $1 trillion last year, up from $200 billion a decade ago, said Irwin Liu, head of advisory for East China at Colliers. That figure may triple to $3 trillion by 2035, he said.
“Many investors and institutions believe that the true time of the China senior housing market will boom around 20252028, so they are accelerating investments in this space,” Liu said.
The government said last year it would spend 35 billion yuan ($5.1 billion) to build retirement facilities, as part of a plan to improve elderly care.
President Xi Jinping has called for the development of elderlycare services and the pension system, the Xinhua state news agency said this week.
‘MINDSETS EVOLVING’
About 90% of elderly Chinese are cared for at home while about 7% rely on communitylevel assistance in day-care and other facilities, and only 3% live in retirement homes - a make-up that the government and the industry refer to as “9073”.