Senior living for rent in China are mainly comprised of old people’s homes, social welfare institutes apartments for the aged and healthcare institutions for the aged all fall under two government systems: Standards of Social Welfare Institution for the Elderly and the Special Care and Placement System for ex-military and servicemen Types of Facilities Available .
In China, the primary social welfare system for elderly includes the 8 types of senior care facilities which differ from each other in terms of sponsor nature (the state or private), adopted elderly ’s self-care capability and service duration etc. •Of these 8 types, all except Social Welfare Institution for the Aged (??????? ) can be run by either public or private operators •Typically, facilities operated by corporates will target the mid-high end market while facilities operated by the public, non-government organisations or individual contractors target low-middle class elderly.
Supply shortage Rural areas have historically had a stronger demand for senior living facilities due to the higher proportion of elderly and the government has focused on providing a basic level of health care to these rural areas •Rural senior care institutions contribute to approximately 80% of the total senior care capacity in China, in terms of number of institution, bed and adopted elderly while urban senior care institutions account for c. 16% of China’s senior care capacity.
The remaining institutions are for ex-servicemen under China’s Special Care and Placement System (??????) The latest government statistics indicate that there is significant unmet demand for senior living facilities in China •There are 2. 7 million beds available in China in 2009 and some industry reports estimate there to be a shortage of approximately 5. 7 million beds •According to the China’s 12th 5-Year Plan on senior support (Consultation Paper) and aged population forecast, the government is targeting 6. 48 million beds in senior care institutions by 2015, representing a CAGR of 16.
0% against 2009 •The unmet demand for senior living facilities appears to exist primarily at the low end of the market, as press articles report long waiting lists at a number of lower end facilities, while some recently opened mid-high end facilities are reported to have low occupancy Facility ownership models There are four ownership/operating models in China (1. Public invested and operated senior care institution, 2. Private operated senior care institution originally invested and operated by the public, 3. Public constructed and private operated senior care institution and 4.
Private invested and operated senior care institution, with public support) •Private operated institutions (type 2 and 3) are the most common and can range from low-high end. Private operators can include both corporate (e. g. Shanghai Heng Hui) or individual contractors. •Type 4, private owned and operated, is more challenging as operators are required to obtain the land use right although research suggests that the Government has recently begun to encourage private organizations and provide subsidy/assistance.
Fees charged by these facilities are more flexible compared to the other types and examples include higher end institutions, such as the Cherish Yearn facilities which charge up to CNY 12,000 per person per month •The market for senior living appears to be heavily fragmented and market statistics are not available Based on our research, private operators in China typically manage a small number (1 – 3) institutions and there does not appear to be any large, national, private operators Financial investors
The senior living industry in China is still in its infancy and there is limited market and financial information available Research indicates that the market is primarily comprised of not-for profit organisations and there is no established business model for profit-oriented organizations There appear to be two key groups of investors actively exploring the senior living for rent market •Local insurance companies – Several local insurance companies have applied for and obtained the 1st certificate for investing in the senior community from the China Insurance Regulatory Commission (CIRC).
As an example, Taikang Property obtained the certificate in November 2009 and has announced plans to invest in the construction of senior communities in Beijing, Hainan and Shanghai. These communities are expected to be rented as opposed to be offered for sale •Foreign investors – China’s senior living market has received significant interest from foreign investors although we understand, these are mainly in the early stages of planning and negotiation. Overseas investors reported to be exploring opportunities in China include hedge funds, REITs, real estate developers and foreign senior living and healthcare operators