Housing China’s rapidly aging population, once a problem for the government, is increasingly a growth opportunity for mainland insurance companies and property developers.
As it looks for external support for a largely undeveloped sector, Beijing has allowed the active participation of private investment in the field of retirement homes and old-age nursing facilities.
Shifts in China’s population structures, as well as changing social attitudes in first-tier and wealthier second-tier cities, are changing the traditional model by which youth take on full responsibility for caring for elderly parents and grandparents. While the traditional approach to elder care will not disappear in the near future, senior citizens have now stepped into the sights of developers looking to expand investment in long-term residential facilities designed specifically for older occupiers.
“The market is still very young, but we are seeing an upswing in the number of players getting involved in elderly care,”said Jin Yong, China COO at property firm CB Richard Ellis (CBG.NYSE).
A better way
Unlike traditional government-built nursing homes, which often lack professional facilities and tend to be in a dilapidated state due to negligent property management, private care homes have the potential to be built and operated to very high standards. The trickle-down effect to even state-run facilities could be noticeable over the coming years.
For the time being, insurers are leading the charge.
“Like in more mature markets in the US, the UK, Australia and Japan, insurers are taking the lead, and private capital – mostly from developers – is following quickly,” Jin said.
China Life (LFC.NYSE, 601628.SH. 2628.HK), the country’s biggest insurer, has expressed strong interest in building retirement homes through its subsidiary, China L