A S Sivaramakrishnan, Head – Residential Services India, CBRE South Asia Pvt. Ltd., shares his views.
Retirement housing, senior housing and homes designed for assisted living are the next major real estate trend on the horizon. A number of real estate developers across the country have identified retirement/senior citizen homes as a sunrise segment and have begun to provide residential products customized to the specific needs of the elderly in the country.
India’s senior homes property market is a very niche and nascent segment currently, which attracts end-users with a genuine need of such housing products rather than the investor community.
Location, scale and formats
The location is what determines that a retirement housing project is feasible for all stakeholders involved. For it to be a success, the project needs to be developed across a large complex; and for it to remain affordable for the end-user segment, it needs to be located in the peripheral areas of cities where such large tracts of land are more affordable than locations near the city center. This also ensures the availability of urban utilities, best-in-class healthcare facilities, and other citizen requirements.
Assisted care for the elderly and ailing, medical care in terms of tie-ups with the healthcare community, relevant recreational facilities, security, maintenance and housekeeping, etc., are some of the basic requirements for retirement/senior citizen homes.
Senior housing in India is usually available in large-scale formats of 10–60 acres, mid-scale formats of 4–10 acres, and 1–4 acre small-scale projects; while financial models are available in sale, leasehold as well as monthly rental models. Typically such housing units vary from 50–100 units in a project to a maximum of 400 units within a single project; and most of these are in the 1–2 BHK formats, with unit sizes ranging between 500 sq. ft. and 1,000 sq. ft. at an affordable pricing range for the retirement community.
The key challenges for developers launching senior citizen housing projects in the country are mainly the affordability factor and the lack of trained manpower sensitive to and capable of handling such specialized projects.
Finance Models: Lease v/s Sale
Developers specializing in senior housing today offer various retirement home options. While buying such a product offers better returns on investment with better guarantees for services and care, rental options offer more affordable options for seniors after retirement. In some cases, one can choose from a range of affordable combinations on the lease deposit and monthly rent for a unit. While monthly expenses on utilities and community expenses are included in the price of the home, the lease deposit is returned once the property is vacated.
Sometimes senior citizens are also offered the option of capital appreciation on the lease model when vacating a property, wherein along with the original lease deposit one will also receive a percentage of the capital appreciation on the lease value of the property in question. Depending on the end-user’s affordability level, both purchase and lease options have their advantages.
This concept of retirement / senior citizen housing is largely the result of a social change in our traditional lifestyles as well as of our “demographic dividend”. Consider the fact that India’s huge youth population will transition into an equally large aging population in a couple of more decades; and therein lies an opportunity for the housing sector. Senior homes are already a reality of our times, and are expected to become a social necessity in less than a decade.
In the absence of our large, traditional households that came with their built-in social security net and a non-existent social security system funded by the State, retirement housing projects are some of the few options left to an aging population to lead an active life after retirement.
There exists a vast untapped potential in India for alternative asset classes, such as senior housing projects. As they look towards expanding their footprint beyond conventional real estate asset classes, significant investment from private developers as well as institutional investors are required for the growth and development of these niche segments.
While such new formats might see a comparatively slower pace of expansion vis-à-vis other formats such as tech parks and logistics parks, the growth of this sunrise segment is imminent in the long-term, given a sustained demand for the same from a large aging population in forthcoming years.
