Retirement homes no longer a concept

Australian firm hopes to be trendsetter in industry with huge growth potential

Australian retirement property management company Independent Management Group wants to be the prime mover and flag bearer of what it believes is an industry with huge potential in China.

"It is a nascent sector with lots of promise. Retirement property development is yet to start officially in China, though some projects are underway," said Susan Malone, executive director of IMG China and managing director of IMG Australia.

"We want to create our own standards here so that we have a promise to the people and their families. At the moment, there is no standard and we think it will come eventually. The government is bound to announce standards soon."

Government regulations are important for people to understand the quality of retirement property projects and to ensure that the operators of such projects are honest and fair, Malone said, who started to study the sector in China five years ago.

According to Malone, China is a huge market where the number of people over 70 is expected to triple to more than 349 million in 2050 from 111 million in 2010.

"This is a massive number and we must find ways to cope with this while providing a respectful and dignified life for the elderly. It should be something that still has meaning and enjoyment."

Unlike other markets, the Chinese market will move in an opposite direction, from up-market to more affordable end, unlike the Australian mode of development from low-cost projects by religious and charitable groups to up-market ones by commercial parties, she said.

With people aged above 65 accounting for 17 percent of its population and its society aging rapidly, Australia has an established senior living industry, with 5.5 percent of those older than 65 living in retirement villages, which are different from nursing homes. In the United States, the penetration rate is about 10 percent.

Take the first resort-style retirement village project in Australia operated by IMG for example. A 120 square meter apartment costs about A$1 million ($914,310) and basic services cost A$700 a month, which does not cover services such as dining and haircut.

IMG and Guangzhou City Construction & Development Design Institute Co, which is wholly owned by Guangzhou-based and Hong Kong-listed developer Yuexiu Property Co, signed an agreement earlier last month to forge a strategic alliance for retirement property business.

The two sides will share expertise in planning, design, management and services related to retirement property, said Li Wei, president of Guangzhou Institute, adding his institute has been working on related standards.

The retirement property industry has huge potential in China and the elderly need public services that are supported by related government policies and growing personal wealth, said Huang Weigang, deputy general manager of Yuexiu Property, a real estate company.

Yuexiu Property plans to launch pilot projects in the near future to renovate some clubhouses in communities and turn them into day centers for seniors. It is researching on building seniors' apartment buildings in new communities and will launch a new project with seniors-friendly designs soon, he said.

IMG is also working with its joint venture partner in China, Grand International Group, on feasibility studies for two projects in Guangdong and Jiangxi provinces.

It is also talking with a foreign joint venture for a retirement property project in China, having provided training to some Chinese property developers and government-funded programs. In June, IMG signed a memorandum of understanding with Shenzhen Qianhai Kunyuan Smarter Co, to assist the company in marketing of training programs. At the same time, it is also talking to some Chinese hospitals and hotels to offer more medical and accommodation options for future clients.

"We want to work closely with local developers and local people. We are not trying to bring an Australian product to China as it is," Malone said.

"We also want to make sure we have a product and a platform that is appealing to investors and developers so that funds or individual companies which want to move into this market recognize that here is a company that can assist. This is a long-term approach," she said.

Liu Kanyan contributed to this story.

liwenfang@chinadaily.com.cn

A senior citizen checks out rates for a retirement home at a housing agency in Beijing. Demand for retirement homes will keep on growing in China over the next few years. Provided to China Daily