Lendlease, an international property firm and a major player in Australia’s senior housing market, has inked a roughly $301 million deal to build a 900-unit retirement community in Shanghai.
The Sydney, Australia-based company, which owns a portfolio of more than 70 retirement communities in Australia, has completed about 300 real estate projects in China since the 1990s. But the deal marks Lendlease’s first foray into China’s senior care market—and one of the first times a foreign company struck a deal in the business segment without a local partner, reported the Australian Financial Review.
“With government policy changing five years ago we saw an opportunity for us to leverage our skill set from Australia and bring that across to China,” Tony Lombardo, Lendlease’s Asia CEO, told the Australian business publication.
As planned, the community’s “living units” would come with access to gardens, areas for recreation and an array of health services. Long-term apartment rights start at about AUD$340,000, and Lendlease will own the rights to the site in Shanghai’s Qingpu district for 50 years.
The new development is aimed at riding a fast-growing demographic wave of aging adults in China. By 2050, there’s anticipated to be approximately 330 million people over 65 in the country. That population growth has in the past helped drive up interest in China for Western-style senior living communities—a fact that has drawn interest from senior housing firms in the U.S. and abroad.
The Australian senior living market is also fairly attractive to foreign investors. Last year, rumors swirled that China-based Cindat Capital Management and New York-based Blackstone Group (NYSE: BX) were among bidders for a 50% stake in Lendlease Group’s Australia senior housing business.
Many Chinese investors have viewed the U.S. senior housing market with a similarly large appetite. In the first quarter of 2017, about 13.4% of the U.S. senior housing properties that traded hands, or $629 million, were acquired by Chinese buyers. Later that year, a Beijing-based real estate and leisure firm was rumored to be in talks to acquire industry giant Brookdale (NYSE: BKD), though those talks ultimately fell through.
Despite that interest, Chinese investments in the U.S. senior housing market have stalled in the past year, possibly due to the fact that changing policies in China are potentially constraining foreign real estate investment.
Written by Tim Regan