Greying Market Holds Major Potential For Developers With The Right Approach
Published on Bangkok Post dated 25 March 2012 by Aliwassa Pathnadabutr, Managing Director of CBRE Thailand
Increasing longevity and independence among seniors mean major opportunities, but there are essential points that must be covered to satisfy this niche group By Aliwassa Pathnadabutr
Amid growing end-user demand for condominiums in Bangkok, developers must pay more attention to buyers’ needs and requirements. Newly launched projects tend to follow a generic development model that satisfies broader market requirements in terms of unit type, size, grade, pricing and style. Under this model, small one and two bedroom units target low to middle income buyers and larger units target the higher income group.
These projects will almost without exception follow a basic pattern, with features and facilities such as swimming pools, gyms, steam and sauna rooms and landscaped gardens.
While most developments satisfy general market demands, particularly for the new generation of modern city dwellers which includes white-collar workers, young couples, new families and singles, the needs of many niche markets are being ignored.
One of these with growth potential is the elderly market. With longer life expectancies coupled with lifestyle changes, the ageing population is now becoming increasingly independent and self-reliant. As a result, the elderly require accommodation that is tailored to their needs.
Such accommodation has been developed extensively in many developed countries such as Japan and the United States, either by non-profit organisations that help poorer people, or by private companies targeting the high-end segment.
In Thailand, the concept is relatively new as the younger generation typically take on the responsibility of looking after their parents. This is the chief reason the local elderly market has escaped the attention of most developers.
LPN is one of the very few developers that is beginning to test this market by introducing its “Platinum Zone” concept, setting aside the three lowest floors of selected condominium developments and customising them with specifications and add-on features such as nursing services. In conjunction with the Thai Red Cross, LPN has also developed Sawangkanives, a project for the elderly in Samut Prakan.
If the retirement home concept is to take hold in the Thai market, there will be demand from different market segments, from the middle to higher end. Product and service levels could range from basic nursing care to an extensive healthcare programme, amenities and personal care services. The target customers could also be healthy elderly people or those with specific illnesses or health needs.
To ensure success, the project’s concept must have an exclusive focus. The needs of this segment are very specific and therefore an in-depth understanding of their requirements is essential to build a product that appeals.
One key differentiator in the elderly market as opposed to other traditional condominium buyers is that location is not as important.
The elderly do not need a property in central business areas or near mass transit, giving developers more flexibility in choosing a suitable site at a substantially lower cost.
The product requirements of this group are also much simpler in terms of design as the focus is on practicality and usability. For example, an open-plan studio style unit tends to be popular. Features such as non-slip surfaces in common areas and units, along with wheelchair access throughout the project are important. Bathrooms must also be designed with safety features such as railings and non-slip flooring.
Project facilities also need particular attention. Apart from a swimming pool and fitness room, features such as a recreational garden and lawn for outdoor activities and relaxation are recommended. In addition, a library, computer room and meditation room would be good features to provide.
Special provisions for pets should also be considered.
What is most important for a successful retirement residence in addition to the living spaces on offer is the quality of health care and other add-on services available.
Healthcare services should include 24-hour nursing care and links with nearby hospitals or medical facilities. A project jointly developed with a hospital will have advantages in terms of reliability in providing the medical care needed by the ageing population, such as physical therapy and advice on nutrition. Add-on services such as cleaning, meal preparation and funeral arrangements prove attractive to seniors as well.
It is also extremely important to create a sense of community among the residents through, for example, regular group activities and appropriate exercise classes.
Apart from project design, specifications and add-on services, developers should also give detailed thought to aspects such as the minimum age requirement as this will help develop a common community within the project.
Another consideration is the ownership structure suitable for the target market. Other markets have shown that leasehold works better than freehold as it is more affordable. Community and individual properties are also easier to manage under a leasehold structure with a professional management company, rather than a juristic person under freehold ownership. The developer needs to offer support by providing a workable financial scheme.
The elderly market pays less attention to the investment aspect when buying property, as their priority is to have a good and affordable quality of life until they pass away. In fact, in most existing projects the units are returned to developers after the occupier passes away. Developing a project targeting niche markets such as the elderly can be challenging and requires extensive research to thoroughly understand the specific needs, but there is a growing demand that is currently unmet. At the same time, developers targeting this segment should be aware that it entails not only development but also a long-term commitment to providing accommodation, professional care and services.