Hong Kong will be short of over 60,000 elderly places by 2032
Government should take steps to encourage developers to build more senior living
HONG KONG, May 16, 2023 – Hong Kong is expected to have the oldest population in the world by 2050, but the city is not responding to either the growing senior population, or their evolving lifestyle preferences. JLL expects the city will face a shortage of over 60,000 suitable elderly places by 2032, according to its The Rise of Senior Living - An overview of opportunities and the investment landscape in Hong Kong and The Greater Bay Area report released today.
The population aged 65 and older in Hong Kong is expected to increase by 46.3% in the next decade, however, the number of residential care places for the elderly is scheduled to increase by 0.24% only. At the same time, our elderly population has never been healthier or wealthier, and the way our parents and grandparents want to live is very different from the way their parents and grandparents lived. With a projected senior population (aged 65 and above) of 2.2 million by 2032, we also consider that Hong Kong needs to find an alternative to residential care home which may be more suitable for our growing senior population.
We also utilised our proprietary Geographic Information System to consolidate the big data in order to provide a holistic picture on the aged population and senior housing market in Hong Kong. This enabled us to build up a clear picture of the current elderly housing provision landscape in Hong Kong, where we and identified that Kwun Tong has the most serious shortage of residential care place supply among the districts.
Wendy Chan, GBA Growth Director of Value and Risk Advisory at JLL in Greater China, said: "The aging population is a time bomb for Hong Kong as the city will have the highest global share of people aged 60 or above by 2050 at over 40% of the population. With our elderly population forecast to grow by half a million over the next decade, it is critical to have enough suitable accommodation in the city and the mainland cities in Greater Bay Area (GBA) to defuse the problem."
Options for the elderly in the city are currently mostly limited to living with their families and Residential Care Homes for the Elderly (RCHE) which provide approximately 74,200 care places providing crucial services and care to elderly residents. However, these facilities can be basic and offer limited privacy and independence to residents.
“We expect that there are more elderly residents with greater wealth who wish to continue to live independent and active lifestyles in retirement. Therefore, the government should consider dedicating land specifically for elderly home use, encourage public-private partnerships to unlock this sector and offer incentives to speed up development. The Northern Metropolis presents a particularly good opportunity to set aside land for this very purpose and this could really help to ease some of the burden that the government will face with this population time bomb" Wendy added.
JLL said the government and private sector should consider introducing senior living residences, a new kind of elderly residences with better facilities, in Hong Kong.
The senior living residences proposed by JLL comprise luxury-style residential apartments within a complex that also offers a number of nursing, medical, entertainment and service facilities to residents which would not be available in either an elderly home or a private residence. The development could be similar to co-living or serviced apartments with on-site medical and nursing care, and the facilities can be self-contained communities, with access to dentists, medical care, restaurants, cafes, gyms and cinemas. Such would provide the residents with both independence and an aspirational lifestyle with high-quality accommodation and a number of services at hand to make their lives more convenient.
Elderly homes and Senior Living features and comparisons
|Elderly homes||Senior Living residences|
|Mainly operated by NGOs, charities and listed companies||Built by developers, owned by investors and operated by a private care company|
|A licence for operation is required||Typically, no licence is required|
|The accommodation fee is usually paid monthly by the residents||Various payment types: monthly fees, a debenture system or private treaty sales|
|Maximum building height of 24 meters||No limits on the building height|
|Typically, residents lease a bed space rather than a certain designated private area||Residents lease or buy a private self-contained apartment within the facility|
|In-house care is usually limited to nursing facilities and additional media care requires external services||Have on-site medical and leisure facilities providing specialist services|
|Facilities are aimed at elderly residents who need regular nursing care||The level of care provided is flexible and tailored to the residents’ actual needs|
At the same time, by providing more suitable elderly accommodation, more conventional flats would be released to the market after increasing elderlies move into these new projects, which could also help to alleviate some of the existing housing shortages.
Tom Parker, Institutional Clients Director of Value and Risk Advisory at JLL in Hong Kong, said: "Senior living residences have been prevalent in European and North American markets for a longer period of time. Based on the data from these markets, senior living residences could generally benefit from a 100-150 bps cap rate premium when compared to residential cap rates, making it an attractive sector for real estate investors, particularly as more investors are actively exploring alternatives as they search for higher returns.
With the potential for strong levels of return, coupled with the stable nature of the sector and the growth of the key elderly demographic in both Hong Kong and the mainland GBA cities, Parker said senior living presents an attractive opportunity and he expects to see far more activity within this space over the next decade.
The firm suggests developers look at older residential buildings or hotels which may transact at a slight discount. However, with prices still relatively high and competition from residential developers, it is challenging for senior living developers to acquire suitable properties or land. The land and property prices in the mainland cities of GBA are lower, but with lower levels of potential return, it remains difficult to find viable schemes. This is why it is essential that the government looks at ways in which it can support the development of this sector.
Parker said the government needs to take steps to try and encourage more Senior Living development in Hong Kong. One of the hurdles at the moment is that the developers who are interested in developing senior living residential must compete with developers during government land sales. The government could consider releasing land for tender with a specific Senior Living use clause or make it easier to re-purpose existing assets for this use. This could encourage greater development in the sector.
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.9 billion and operations in over 80 countries around the world, our more than 105,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.