China’s Senior Housing Market Attracting More Private Investors and developers
CHINA’S market for seniors’ care homes is attracting an increasing number of private investors and developers as the country’s ageing demographic profile, coupled with high-level policy support, boosts long-term demand in the industry, even though the majority of senior care institutions are currently operated by government and public institutions, according to a latest industry report.
While the sector offers significant investment potential, private investors and developers do face challenges in identifying the right, commercially viable opportunities, CB Richard Ellis, a leading international real estate services provider, has concluded in its report "Senior Housing in China: A Market in the Making."
The senior care industry in China is still at the very early stage of development with around 100,000 senior housing institutions as of the end of 2010, providing a total of 3.5 million beds, according to the Ministry of Civil Affairs.
Though government departments remain the largest operators in the market at present – accounting for about 80 percent of the total supply in Beijing and Shanghai, the country’s two most mature and affluent markets – recent years have seen increased participation from the private sector, among which domestic developers and insurance companies are the most-active first movers, according to CBRE research.
There have also been more foreign investors and operators seeking investment and business opportunities in retirement properties in China in recent years, mainly through forming partnership with local entities. Private equity funds, however, still remain hesitant to enter the sector as it is still at a very early stage of development.
The progressive ageing of China’s population, combined with the gradual shift toward an institutional based mode of elderly care, are making a compelling case for investing and developing more senior living facilities in the years ahead. However, the lack of a regulatory framework has so far confined private sector participation to the upper tier of the market.
Implementing a clearer governance framework for the sector and introducing a systematic incentive scheme across the country to encourage the entry of private players is therefore crucial.
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