I am finding myself increasingly interested and involved in the private elderly care sector, where many China developers are now looking to invest following the downturn in the residential market. It is clearly apparent that the sector is full of question marks, and the next few years will act in testing the fundamentals for how the environment will develop. What we can be sure of is that the China model, or models that develop, will be distinct from that of the rest of the world and whilst undoubtedly elderly care development will incorporate many facets of overseas facilities and management procedure, it will need to find and develop its own path. But it may be a rocky road for many would-be care facility developers.
Elderly care provision is a problem world over. But in China the problem is going to be particularly acute. So what makes China different?
This week China’s National Health and Family Planning Commission announced that “nearly one million” couples had applied to have a second child a year after Beijing’s relaxation of the 1-child policy. The decision allows families, where either parent is an only child, to bear two of their own. The law had previously granted that concession to urban couples alone, where both parents were only children.
With eleven million couples being eligible under the new 2-child scheme, the number of applicants revealed this week was worryingly low and concerns about a baby boom of ten to twelve million babies over five years now appears unfounded. Attention returns to addressing the structural demographic problem of the long term population aging.
In my article of 1st September 2014 I touched upon the Chinese government’s “active” role in promoting the construction of care homes for seniors. It still appears however that possibly 90% of the elderly population will need to be supported directly by their families. In 1996, China officially required children to care for aged parents. Due to the demographic imbalance resulting from the 1-child policy of the 1970’s, a massive burden is now developing on the young working population.
The current Y generation entering the employment market have big decisions to make. Single children themselves, many of single parents, they are likely to need to look after both their own parents on retirement as well as their already retired grandparents.
The obvious financial burden of maintaining up to 6 elderly family members clearly acts to dissuade young people having children as well. Explaining why they chose not apply to have a second child, under newly relaxed policy, as well as costs, respondents cited lack of time and space as key concerns. The famous 1-2-4 scenario of a couple supporting one child and four parents may develop into 0-2-4-8 where parents and grand-parents replace the single child.
Typically the close knit Chinese family would together support new children, with the elderly generation minding youngsters whilst the parents worked. Over the last decade of rapid urbanisation, one aspect of this has given rise to absent parents who have left their rural villages and moved to the cities for work, leaving rural settlements empty but for the elderly and their charges.
Recent trends have anticipated that urban workers would prefer to bring their families to the cities so that they can also take care of them whilst they bring up their children. But here, availability of affordable space and the associated higher costs become significant issues.
Even the well educated young urban population is finding it increasingly impossible to afford home ownership. This prohibits them from even getting married, since males are under cultural pressure to be able to provide a house in advance. Any such accommodation may also in future need to accommodate 4 parents and 8 grandparents before there are even any children to consider.
Under such pressures we can envisage the new generations having to cast off many of the traditional responsibilities that they carry. Their outlook growing up in “new china” will by necessity be different from past generations. One thing is apparent however and that is that the key to population growth and elderly care will continue to be closely intertwined. Many more elderly are going to need to live in cities, independently and yet still be closely tied with their families in developments which promote aging in place. Residential development will become increasingly focused on promoting “elderly” attributes as the main sales focus, with expanded health and wellness issues coming to the fore. The proximity to senior activities, learning, nursing and critical care will prove more compelling than that of schools and kindergartens, yet the two may become drawn closely together.
The elderly will need to live with their families through several stages of care under or close to the same roof, from those that are active needing highly varied offerings, well connected to regular mass transport and a local community as well as those needing critical care. The concept of the “out of town retirement village” will have no play here. Developers are going to have to provide increasingly dynamic and varied product to meet the demand and “he who dares,” probably wins.