Opportunity Abroad: Developing the Senior Living Sector in India

India’s senior population is expected to grow 250% by 2050. This surge coupled with the country’s underdeveloped senior housing industry offers plentiful opportunities for providers looking to offer housing and related services for India’s older adults.

The global aging phenomenon is opening doors of opportunity for the American senior living industry in multiple countries across the world.

By 2050, the worldwide population aged 60+ will reach two billion people, and three-fourths of those people will be residents of developing countries, according to United Nations data.

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The United States has one of the most developed senior living industries in the world, and while development and investment opportunities still exist domestically, there are plenty more to be found abroad.

The Opportunity in India

India has emerged as a prime space for senior care development thanks to its huge—and growing—population of seniors and a market that is almost completely undeveloped.

There are currently 98 million elderly people living in India today, and the 60+ population is expected to swell to 240 million by 2050—one of the fastest-growing demographic segments in the world, according to a December 2011 report from Jones Lang LaSalle.

An estimated 27 million Indian seniors need specialized medical care, and this number will continue to grow, but specialized housing that caters to seniors’ needs is largely absent in India.

“We are still at an infancy state in the point of formal senior care communities being formed,” says Saumyajit Roy, associate director of the Strategic Business Unit at Jones Lang LaSalle and author of the report.

It’s difficult to say what the differences are between American and Indian senior care because it’s still so undeveloped in the latter country. However, Roy did say that the models are “completely different, as are the economies and the cost aspects.”

While about 12% of seniors in the U.S. live in senior living communities, there are simply no senior living communities in India for seniors to stay in, says Roy, and what you’ll often see instead are inter-generational, mixed housing developments.

This presents a “huge” opportunity for large international senior living companies to take a look at India, he says, because it’s a space where health care has seen radical development in quality with new traditions coming in and being formulated, and senior care is the next step.

Partnering American Experience with Local Ventures

In early January, the Assisted Living Federation of America (ALFA) announced a partnership with Association Senior Living India (ASLI), the first senior living association in the country.

The formation of this group was an outcome of last December’s Retirement Living World India, where senior living companies gathered to discuss how they could meet the rising demand for seniors housing in India.

Roy says he’s expecting to see partnerships form between international providers and Indian health care providers as soon as this year.

“We could potentially see such kinds of opportunities translating into a partnership in 2012,” he says. “We’ve been seeing a fairly high amount of discussion in 2010 and 2011.”

Right now, partnership opportunities exist mostly for foreign operators, says Roy, as Indian developers have a good sense of what’s going on in terms of American senior care community design, but not so much the operational aspect.

“Professional developers can come up with very well-designed senior living communities on their own,” he says. “But they will need partnerships with international players to learn how to manage these communities.”

Opportunity and Challenges Ahead

There is “terrific” opportunity in partnerships, agrees Steven Vick, co-founder and CEO of Irving, Texas-based Signature Senior Living and director of ALFA.

“In developing any model of business, you do something, then you stub your toe and learn from it,” he says. “I think that’s going to happen in India similar to how the American market was developed, on a variety of levels, because of the culture and the traditions.”

Venturing abroad is “a huge deal,” he says, in terms of the risks, regulations, due diligence, and understanding all the financing and banking laws.

For those interested in getting involved, Vick recommends getting in touch with ASLI, finding a good lawyer and a good accountant, and connecting with a local developer who knows the local customs and codes.

Serene Senior Care Private Limited, a local Indian company that’s already developing senior living, provides primarily independent living services for residents (like housekeeping and meals) and is currently expanding into more extensive services.

One thing to note about Serene’s methods, says Vick, is that the company’s managing director, retired Colonel Achal Sridharan, is focusing buildings predominantly in small suburbs and towns versus metropolitan areas.

That’s because India has some of the most expensive real estate in the world, says Vick, and this presents complications in terms of development costs.

With a population of about 23 million, land in Mumbai is “tens of millions of dollars an acre,” he says, and high land prices affect the model or style of communities, as well as where they’re located.

Another possible barrier is social attitude toward the idea of senior living communities, and whether they’ll be affordable. In Indian culture, families have traditionally taken care of their elders, but Jones Lang LaSalle’s Roy says that as the country continues to develop, many adult children do not have time to care for their parents, but they are better able to pay for their care.

Private Sector Will Lead the Way

The majority of development will be coming from the private market since India’s government is largely absent from the senior housing and care sector, says Roy.

“The private sector participation in the senior care market will be very much like the health care market in India, where the key health care players are all large private players,” he says. “We foresee that happening in senior care as well.”

The private market is taking the lead, versus a government program, he continues, not only in project formulation, but also in creating quality standards and best practices.

The Indian government also removed restrictive conditions in October 2011 relating to foreign direct investments into construction development of old age homes, Roy says.

In the past, a majority of a development project—at least 51%—had to be locally owned, says Vick. “They restricted international folks from investing into their stock market in a significant way, and they’ve compromised on that,” he says. “It’s a step in the right direction.”

For now, at least, it looks like partnerships between local developers and foreign operators are needed more than direct equity from the international community.

Participating parties will have to share their best practices and come up with a new senior living tradition that’s right for India, and once this is done, says Roy, then equity opportunities will follow.

“We’re still quite far behind the U.S., but catching up fast,” he says.

Written by Alyssa Gerace

This article is sponsored by the Assisted Living Federation of America (ALFA) as part of its efforts to advance excellence and explore topics impacting the future of senior living. For more information about ALFA, visit www.alfa.org.

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