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The world's greatest senior housing dilemma

March 30, 2012
by Kevin Kolus, Editor
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Yesterday’s article on the most exciting prospect in senior housing had been posted no longer than an hour before I started receiving emails and social media notifications from industry observers with stakes in China.

“The simple fact that the [projected] senior population in China is larger than our total population, combined with plenty of project funding, should energize anyone in our business,” wrote Bill Pemberton, senior vice president at Forte PR, on Long-Term Living’s LinkedIn page.

While the article is broad in scope as it addresses the extreme potential of China’s senior housing market and how U.S. investors and operators can—and should—get involved in the coming years, a reader with experience overseas wasted no time in drilling toward more granular issues.

“I find the question of HR one of the most pressing,” opined Bromme H. Cole, managing partner at Hampton Hoerter, in an email.

Cole, who’s also been in China for three years running a senior living consultancy and writes the must-read blog www.chinaseniorliving.com, points out other issues such as “land availability (as well as cost), upcoming new regime and their likely approach to this sector.”

Noting that many in the industry are solely “hung up on ‘solving’ the China [senior housing] model question,” Cole argued that we might be overlooking other important details.

Still, foreign investors and operators are going to be integral to the development of future senior housing models that stick, and are rightfully most concerned with that approach at this time.

Bill Pettit, president and COO of the Seattle-based assisted living company Merrill Gardens, one the foreign operators invited by China’s government to help solve the senior housing dilemma, captured the current debate over what models are being considered. Here’s a portion of Pettit’s interview that did not make it to the story:

We in the United States have different models for access to capitalization of senior housing. We can do senior housing on a for-sale model, entrance fee model or right-to-use, fee-for-use, senior housing on a rental.

In China, because of this emergence of the middle class where there is a fair amount of wealth accumulation, there seems to be a pre-disposition and purchase of senior housing solutions rather than rental or right-to-use, and that will probably change and evolve over time. But some of the early opportunities in China have focused on the for-sale model and capital has gone in and labeled and designed a senior housing product. Upon sale, capital has moved on to the next project and the sustainable platform of services that makes senior housing valuable to seniors has collapsed, because it hasn’t been well-planned or executed.

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Kevin Kolus

Kevin Kolus

@longtermliving

www.ltlmagazine.com/blog/kevin-kolus

Kevin Kolus wrote for Long-Term Living when he was an editor. He left the brand in 2012...