SINGAPORE : Investors could soon see real estate investment trusts being formed specialising in retirement housing in China, according to experts at an industry conference.
They said such a model is already popular in the west. Still, they cautioned that investing in this nascent industry in China may carry significant risks.
It is estimated that about 3 in 10 people in China will be over 60 years old by 2030.
That's more than double the current proportion, according to the latest data from the United Nations.
Observers believe that the needs of this ageing population could fuel the demand for elderly housing options.
This could include inter-generational housing projects such as granny flats, or dual key units.
Such units allow parents to stay close to their children, and it's expected to be popular in China where there is a strong culture of filial piety.
"We are trying to raise funds to invest in such projects and then we want to list the company at the exchange market. And if hold enough property, we can also list it as property (trust) in the REITS market," said Zhuang Ting, GM of Yinghong Equity Investment Fund Management.
China is reportedly set to roll out two REITS by the end of the year, which involve low-cost subsidised housing.
Observers are optimistic that this could pave the way for a similar REIT to be launched for retirement housing.
But experts warn that there are some risks with the industry as it is still in its infancy.
This includes many grey areas like licensing and the lack of a common regulatory framework across provinces.
"The challenges would be, you would really need to have a strong partner with good government contacts, or even a link with the government directly, and also a strong development partner in order to be able to execute the asset," said Elaine Young, CEO of property player Shama.
Observers said other challenges facing the industry include recruiting or training local talent, as many are still relatively unfamiliar with such concept of elderly housing facilities.
Shama has started to explore options in this industry more seriously over the past year with a local partner.
It said that the benefits to having a local partner could include preferential policies or subsidies for land.
"It's a big step to go into this market. We are talking to a very strong developer who has got six landbanks. They are building, in each of these landbanks, mini cities of which there are multiple towers - say 8-12 residential towers - of which we'd be interested to take one of these towers for a senior living facility," said Young. - CNA /ls
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