Retirement community – the next growth sector in Singapore?December 14, 2015 / By
Faced with a rapidly ageing population ensuing from a low fertility rate and increased life expectancy, Singapore will undergo a demographic transition into a super-aged society by 2030, with at least one-fifth of its population aged 65 and above, according to Moody’s. However, apart from nursing or old folks’ homes, Singapore lacks living options for the elderly needing care.
Drawn by Singapore’s high GDP per capita and high savings rate, there has been increasing interest from international investors to capitalise on the growing silver economy, by providing healthcare and lodging needs for the mass affluent and wealthy retired residents in Singapore. Just how feasible is the retirement community concept here?
One of the key challenges is cultural norms. Many families in Singapore still uphold Asian values and many elderly people continue to live with, or in close proximity to, their children. Retirement homes are often associated with abandoned or terminally sick elderly people, and as such, there is a “social stigma” to sending an elderly parent to a retirement home. Singapore also advocates family as the key pillar of support for the elderly. To support caretakers and meet the healthcare needs of the elderly, Singapore offers a comprehensive but basic care service to its elderly residents.
There is an emerging trend in recent years. According to the Department of Statistics, the number of residents aged 65 and above living alone increased from 20,000 in 2005 to 42,200 in 2014. There is also an increasing receptiveness to retiring in a lifestyle retirement community among a growing pool of educated, and financially and physically independent elderly people. To address this growing need, the government has started to explore group living for the less well-off elderly in public flats. Lifestyle retirement communities and assisted-living care catering to the mass affluent and wealthy elderly, however, are still lacking. As a result, financially well-off families typically employ nursing professionals and domestic helpers to care for the elderly at home. A lifestyle retirement community offered by an established operator could just be the solution to bridge this gap.
To encourage foreign investment, Singapore needs to establish a legislative and financial system to regulate this sector, particularly to protect retirees’ interests. The government also needs to recognise the social cause behind such investment and support potential investors with affordable land. Indeed, potential investors have been exploring the development of retirement facilities for Singapore residents in Iskandar where land prices could be a third of those in Singapore. However, the public response has been lukewarm due to security concerns and geographical separation from families although these could be addressed through gated communities and with the improved connectivity between Singapore and Iskandar when the mass rapid transit system and high-speed rail are completed after 2020.
Clearly, Singapore lags behind other developed markets in the development of retirement communities and will have to play catch up considering the rapidly ageing population. Given industry-wide challenges, government support and public-private sector alliances are essential for investment attraction into this promising growth area.
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