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Tuesday, July 17, 2018

Senior living comes of age

Senior citizens give assured security along with a community atmosphere in their sunset years.

Written by B Sridhar | Published: April 20, 2013 1:43:37 am

The concept of homes for the aged has undergone a sea-change,with the name itself undergoing a change to senior living or assisted living. The services offered include fulfilling the social,security,healthcare,administrative,food and other requirements including understanding what the requirements of a 60-year-old person are as against those of a 70-year-old.

In fact,the entire structure of senior living today is designed keeping in mind their requirements. The layouts of units,architectural aspects such as grab-bars in bathrooms,anti-skid tiles,low-height shelves,bigger balconies for sunlight,nurse servant rooms in bigger units,event calendars of the years offering programs suitable to seniors,primary healthcare facility on campus,and flexible disposal models like sale/deposit/lease indicate a conscious shift in the development community towards the needs of seniors and growing size of this industry.

THE SENIOR LIVING MARKET

There are currently about 30 senior living projects in India. The city-wise break-up would be: 2 in Kochi,3 in Chennai,3 in Coimbatore,7 in Bangalore,3 in Pune,2 in Goa,2 in Kolkata,1 each in Hyderabad,Mumbai ,Bhopal,Jaipur,Delhi,Nagpur and Punjab.

Most of these senior living projects are single developments. Ashiana has multiple developments in Delhi,Jaipur and Pune,Covai in Bangalore,Chennai and Coimbatore,and Athashree is most visible with projects in Bangalore and Pune. The most active cities in this segment are Bangalore,Pune,Chennai and Coimbatore.

Total number of proposed senior living projects: There are about 30 more senior living projects in the pipeline in India. Our existing data indicates that most of them are at the proposal stage,while and construction is underway for two new projects in Bangalore. Of the proposed projects,5-6 are in Bangalore,3 in Chennai,3 in Goa and various single projects in other cities.

Size of the senior living industry: Senior housing is a $25 billion industry worldwide. In the US alone,there are over 2,000 senior housing projects with over 5 lakh residents. India is a relatively younger country in this sector when compared demographically to the US and Japan,though by 2025,it is estimated that there will be 173 million seniors above the age of 60 compared to the 76 million today. The current estimated demand for senior housing in India is approximately 3 lakh units.

Types of units offered: Unit sizes in senior living projects are carefully planned,keeping in view the needs (single or double occupancy),utility (layout of a unit),gross value of a unit (limited payment capacity of retired seniors),and overall positioning (medium to luxury) that such projects call for. All sizes and configurations are available,including 1BHK,2BHK and 3BHK as well as studio apartments and villas.

Size: Sizes vary from 500 sq ft studio apartments to 2,500 sq ft in 3 BHK format and villas.

Prices: Prices vary from Rs 25 lakh to Rs 1 crore. Most of the senior living projects are positioned at the affordable segment,bearing in mind the fact that the end consumers are senior citizens with limited resources and no regular source of income. However,there has been a gradual shift visible in Indian society,with the emergence financially independent and lifestyle-oriented seniors. This has triggered the growth of high end to luxury senior living products in range of Rs 60 lakh to Rs 1 crore and upwards.

THE FINE PRINT

As senior living residential projects are designed and tailored specifically to the needs and resource capacities of aged people,there are multiple financial models offered:

Outright sale: Units in retirement projects are sold to the customers above the age of 50 to 55 on a rate per sq ft basis. The entire housing complex is professionally maintained,with services offered on a monthly payment basis. A son/daughter of age less than 50 years can also buy such a unit,but only a senior citizen would be allowed permanent stay in the society.

Deposit model/pay-back schemes: An up-front deposit amount which is a percentage (60-70 per cent) of the sale value of the unit is charged according to the size of the unit,which includes residence charges only.

Charges would be levied at actuals on food,electricity,water,etc. The deposit charges are paid back to the successor with some deductions on administration/cancellation charges on account of death or cancellation,etc.

Lifetime lease: A small deposit amount is charged on handing over the unit to customer. A recurring monthly rent is charged for the duration of stay (this would include rent,electricity and water charges). The rest of the facilities (food,healthcare,security and social engagements) are paid on actuals. The benefit of such an arrangement is that no property tax has to be paid by the unit holder.

Monthly financial outFLOWs: This again depends upon the type of services offered by the service provider,and is calculated on per sq ft basis and can vary from Rs 3,000 – Rs 20,000 per person per month.

Services offered in a senior living facility would range from food,healthcare and wellness,security,social engagement and host of other services like audio visual library,financial/wealth planning and concierge,among others. Food captures the larger share of monthly payments at 25-30 per cent,followed by housekeeping at 20 per cent,healthcare/wellness amounting to 20-25 per cent,social engagement 10 per cent and rest for other miscellaneous services.

Buyers with varying needs are on the lookout for such units. In most cases,the children are residing away from them or outside India. Others include senior NRIs accustomed to such facilities in developed countries and now returning to their home country,and retiring people who are used to a certain level of services and lifestyle. In all cases,seniors are looking for assured security and healthcare along with a community atmosphere.

WHAT’s IN IT FOR DEVELOPERS

The cost-structure of developing a senior living project is quite similar to that involved in any typical residential project. The difference is in the layouts of units and architecture design,which are tailored to the needs of senior people above age of 60-70. Also,there are higher level of common and support facilities (healthcare,mess,club,wellness and gym) offered in such projects when compared to normal residential projects (usually club and gym). Since senior living products are offered to age-restricted customers and models like deposit and lease/rental are offered,the occupancy and thus the internal rate of return (IRR) on such projects are comparatively lower.

Since there is no reservation for senior living projects,these are considered as technically treated as normal residential projects. However,the cost and complications involved in building and operating a senior living project are deeper than merely those of building and selling residential apartments on the same plot. Also,the IRR is more attractive in a residential project as compared to senior living project.

The author is National Director,Social Infrastructure Practice,Jones Lang LaSalle India

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