Retirement Homes: catching pace in Indian market
India is one of the fastest growing grey nations in the world. Thus the need for taking care of the aged, of which the number is exceeding 300 million Indians, is growing sharply. With longevity and pension amount increasing, clearly the need for post-retirement facilities are also increasing significantly. Further, the shift in demographics in India is massive. The sociological impact of this upheaval is the nucleus family moving toward care for parents but at an arm’s length. Thus, the need for companionship and compatibility among grey-haired is another reason for the rising demand for retirement homes.
Also, not only denizens over 60 are independent of their children, but they also want to live independently. Further, with ever-increasing competition in the urban home sector and the risks of one-time capital sale, developers are looking for options where they can offer such retirement homes without have to sell the asset. Homes for the aged, therefore, have gained prominence in the last decade.
So, why retirement homes? Well, a home without hassles and challenges of having to ‘cook and maintain’ is what a senior citizen dreams of. Since round the clock medical service is the priority, these homes offer medical support and easy access ICU facilities in the vicinity of the campus. The support facilities of stewards, as well as nurses can make a difference if the community asks for such a facility in evolved markets. These services are outsourced with professional domain expertise and are brought into such a project.
Also when compared to senior living projects, the scale and the quality of services are different. Above all, there is dignity for the member in a retirement home unlike in a senior living project, which is either NGO-based or funded or for the destitute. It becomes easier for the builder to orchestrate the infrastructure in a way that it is a win-win for all.
For buying a retirement home, there are mainly three options available. First, there are those who offer them with a life-time deposit that members pay, with services to support the membership deposit. Second, there are those who sell small compact retirement homes with planned spaces that lay emphasis on common amenities, access-friendly buildings, food, recreation, and the quality of company that the members will receive being the emphasis. A third option is where people take these homes on long-term lease with the lease deposit being refundable.
Effectively this means that developers don’t have to reflect these sales and work on the revenue in a way that there are margins that some of the company’s division for retirement homes.
Conversely, for retirees who take such homes, there is the benefit of taxation that they secure with expenditure that they can write against such membership fee. It is in a sense amortisation for the builder over a longer time of the asset’s value.
Now the question arises are these retirement homes good from investment perspective? Well, the answer is yes because the appreciation is much the same as for other homes. The advantages that once the facilities and the services ‘settle down’ and the reputation of the retirement home as a brand is enhanced, is obvious. The market acceptance will grow, and so will price.
But what if what is a person wants to exit? Don’t worry. The key is of course market acceptability and our sense says that the deposit root will be more acceptable, for it offers the retiree couple an exit option in case they don’t want to stay in this place. Most of them have their own homes or have children who invite them to stay with them.
With the trend slowly catching pace in Indian cities, these retirement homes are here to stay. And as the market competition grows, prospective buyers will have greater choices and varieties.
Chandrashekar Hariharan
The writer steers Biodiversity Conservation India, the Bengaluru-based pioneer of ZED homes.
The views expressed in this article are the author´s own.
