The real estate industry is waking up to the opportunity of serving the seniors in our society.
With 116 million senior citizens, India has one of the biggest population of golden agers in the world. And the scale of growth of senior citizens is at 1.2 per cent annually. What this implies is that by 2050, India will have about 300 million seniors.
The key reasons for this growth are the increase in life expectancy and positive ageing. By 2050, we will have more people above the age of 60 years than children below the age of 15.
According to Confederation of Indian Industry (CII), the senior housing demand from urban and rural sector is about three lakh units. The current supply of operational senior housing units is only 10,000. At present, the industry is valued at Rs 9,180 crore. With the population of seniors poised to grow to 300 million, there is a huge mismatch in supply and demand.
There is also a significant change in the lifestyles of seniors. Their approach towards ageing and the traditional view of retirement is changing rapidly. People in their 60s have earned valuable assets such as expertise in a particular field and influence in society. These positive agers are poised to start new careers, businesses, philanthropic activities, coaching in their 60s and will create significant economic value well into their late 70s. And they are doing this at the peak of their expertise and influence. Unlike their predecessors, the golden agers of today are creating a new demographic dividend.
In addition, a significant population of seniors have educated their children so well that the children are now global citizens. These seniors do not expect their children to relocate to India to look after them. They are also fiercely independent and have created annuity incomes for themselves.
Real estate developers have realised that the key to senior care communities is not the real estate but the senior care service. In many ways, senior care real estate developments are similar to hospitality developments. Seniors are seeking a bouquet of services specifically designed for their aspirations. Senior living communities are poised for growth because they serve seniors by offering a lifestyle rich in social, emotional, physical, psychological and spiritual well-being. Ageing is inevitable but senior living communities support seniors to be in better health and be more productive. This allows seniors to age much better. These communities also offer freedom from chores such as cooking or cleaning.
Senior-friendly design such as green spaces, transition-free areas and elevators that stay open longer, are just some of the features that allow seniors to live a better quality of life. They have amenities adapted for the lifestyle of seniors such as health care clinics within the community, large clubs with sports and recreation facilities. These communities are growing because its residents are seeking a community of like-minded people who support each other. Most importantly, these communities are staffed by caring and trained teams that are able to proactively support seniors.
The most important reason for participating in the growth of senior housing and senior care is for the good of society. Development of the sector will need a holistic approach addressing the key needs of seniors. The opportunity for India in developing the senior living sector is not only to serve the needs of this large segment of the population but also to evaluate how the country can benefit from the demographic dividend that this segment will introduce to our economy.
One of the key benefits of senior housing for developers is that it focusses on offering services and housing to a niche market segment that has a clear need for the product. The market segment is well defined and reaching this audience is much easier. In addition, conversions are better.
Another benefit is the creation of annuity incomes. Senior care residents pay a service fee for housekeeping, food and beverages, security, healthcare, special programmes and value added services. These annuity incomes are an additional revenue stream for real estate developers.
Senior housing also has better access to capital. As senior care projects have annuity income streams, they have better access to debt, REITs and private equity investments.
As the demand for senior care grows in India, real estate developers in India are aligning with international senior care operators and collaborating for design, service and management of senior housing assets. To address the massive gap in supply, in the near future, senior living solutions will be integrated into most mixed-use developments and townships. Communities will be redesigned to cater to seniors. This will accelerate the scale of the category.
The author is the Chief Revenue Officer at Columbia Pacific Communities