Retirement housing in India gains popularity
The trend of retirement housing projects has been gaining emphasis in India nowadays. According to real estate consultant Jones Lang LaSalle, currently there is an annual demand of 312,000 senior homes across 135 Indian cities, while only 10,000 to 15,000 new units supply is present in the pipeline.
With the intense modernisation in practice, joint families are becoming rare to find. Factors such as rising incomes of people, changing lifestyles, rise of nuclear families owing to relocation of people to different cities (for jobs mainly), etc are driving the demand for retirement housing projects in India. Longer life expectancy of humans is also a driving factor for such projects.
For now, only few real estate companies have been focusing towards senior housing projects in India including Paranjape Schemes, Max India, backed by Tata Housing Development, Goldman Sachs Group, Ashiana Housing and The Covai Group.
The Athashri retirement community in Pune, managed by Paranjape Schemes, offers Western-style amenities such as a clubhouse, library, gym, pool, etc but with a distinctly Indian twist – like a Ganesh temple on site. The project includes 180 units in total. It enjoys better weather and less bustle than nearby Mumbai, overlooks open fields and hills and is set in lush gardens — an appealing escape from the crowds and grime of country’s mega-cities.
Retirement communities like Athashri have just started to gain popularity in the nation which is widely used to joint family structures. The concept of housing for the elderly population still carries a social stigma in the country, which accounts for less than 1 percent of the $25 billion senior housing industry worldwide.
Tata Group’s real estate arm Tata Housing Development had launched its first senior housing project in May in Bangalore and is planning to launch four more projects of this type. The firm is looking to cater to the class of 55 plus population which is looking for better security and services than what is available in ordinary housing. It is expecting to get revenues of Rs 95 crore from its Rs 70 crore project investment over three years.
Since a major group of senior citizens are independent, financially stable, well-travelled and socially connected, they possess a clear plan of how to spend their time and money after retirement, elderly housing projects serve as a good investment destination.
India is much younger than countries like Japan, China or the United States, because the number of people over age 60 is expected to more than double to 173 million by 2025.
Many 60+ people staying in abroad prefer coming back to India (non-resident Indians or NRIs). They mostly aim towards buying retirement homes and settling down in the homeland. Such people serve as a key target market to developers of senior living projects.
Most of the country’s retirement homes focus towards the urban middle-income and upper-income buyers who can afford to pay between Rs 30 lakh to 60 lakh for an apartment, which is meant to be of lesser cost according to Western standards but beyond the reach of the average Indian. In United States, people mostly prefer to rent retirement homes, while in India, people prefer to own.
Max India has come up with a villa project in the northern hill resort town of Dehradun with villas priced over 10 million rupees.
Investment in retirement homes in generates annual returns of about 25 percent for developers in India, which is less than the 35 percent that is typical for comparable ordinary housing in the country, Jones Lang LaSalle said. An important reason behind this could be that the retirement communities demand more open and communal space.
However, the major challenge to this emerging sector is the social stigma associated with elderly family members living on their own. Until about two decades ago, the social structure of India was much different than the present one, allege market experts. They said that the growth in the education and remuneration of middle class families caused a dramatic shift in thinking.
As per government data, the share of households in India in the year 2000 with five or fewer members was around 60 percent and it grew to 69 percent in 2011, marking a shift away from the traditional multi-generational family system. Some of the developers also opine that when senior housing projects were introduced initially, it was very difficult to find buyers but now there are around 1500 families staying in those homes.
Pune-based Paranjape, which operates the Athashri project, along with three other developers in the city, is planning to develop a senior-living project in Bangalore and three more in south India.
At Paranjape’s Athashri, special facilities have been provided to cater to the needs of elderly residents, which differentiates it from other projects. Some of them include- corridors with handrails, a doctor’s room, a 24-hour ambulance, anti-skid tiles, etc. All units have multiple red emergency buttons and a rope in the bathroom for calling a caretaker. On an average, these projects may cost up to 30 percent extra because of the additional features and amenities. Due to this, the developers sell these residences for 15 to 20 percent more cost than regular units of similar sizes.
However, developers claim that they are not getting a good margin in developing retirement homes as they end up investing more on the special amenities and features for senior citizens. But the developers are hesitant to put higher price tags on the projects as they are worried it may affect the sales. They manage to keep the prices of retirement homes affordable to attract middle-class buyers as most of them would have to pay in cash because not many Indian banks offer loans to retired people. The builders are hopeful that, in future, once the industry develops, they can charge more for amenities such as food and facilities.
