In the past few decades, Indian developers have ventured into the senior living sector, offering projects under the independent living, assisted living and retirement communities offering amenities such as household services, recreational facilities, and community spaces. Such projects also have medical facilities such as ambulance, regular medical check-ups, tie-up with hospitals, and round-the-clock medical staff in some cases.
One must be cognizant of the fact that senior living projects are distinct in terms of financial feasibility, revenue and ownership turnover post the elderly tenant’s demise. Also, it is an end-user driven segment, with the homebuyers having limited growth prospects in financial assets and income. Hence, the developers market the projects based on different financial models as per the local demands, the financial viability of these projects, and sale plans. Broadly, there are three types of financial models – outright purchase / ownership model, lease/rental model and reverse mortgage, the details of which as below:
Outright purchase / ownership
About model
- Prospective homebuyer can directly purchase the apartment from the developer.
- Apartment can be tranferred through ‘Sale Deed / Transfer Deed’
- The allotee will be the owner of the apartment.
Transfer
- Post the demise of the owner, their legal heir(s) may use/sell/ lease/rent the apartment for residential use of Eligible Residents only.
Type of project
- Independent Senior Living
Lease/rental
About model
- Prospective tenant can secure the apartment via lease or rent from the developer for the agreed period, on mutually agreed terms.
- The security deposit / advance, maintenance charges may be clubbed into the rent or paid separately as per mutual agreement.
Transfer
- Post the demise of the owner, complete ownership is retained by the developer of the project.
Type of project
- Independent Senior Living
Reverse mortgage
About model
- The model is similar to the lease/rent model where a prospective tenant can lease or rent the apartment from the developer for the agreed period, on mutually agreed terms.
Transfer
- Post the demise of the owner or completion of the mortgage period, the property shall devolve as per the mutually agreed terms of the agreement.
Type of project
- Independent Senior Living, Assisted living.
Currently, all the primary developers of the sector operate on either of two models – outright purchase or rentals (with a security deposit and monthly charges). Our analysis at Housing Research points out that approximately 60 percent of the projects in India use the outright sales model. Although, a notable 27 percent of the projects also use the lease model. Also, maximum projects in Bengaluru – the prominent hub of senior living in India, use the outright purchase model. In contrast, other hubs such as Coimbatore and Chennai have blend of both outright purchase and lease models.
While several models have come-up to cater to the evolving needs of the senior citizens, the segment still faces several bottlenecks such as affordability, staffing (in terms of healthcare providers), legal framework, low comprehension of the stakeholder's financial models and mechanisms, and lack of incentives for developing such projects. The segment is still incipient in India and needs robust government support, senior-friendly policies and incentives for making such projects more financially viable for both developers and homebuyers. We see that there is still a need and a lot of headroom for socio-cultural and economic restructuring for senior living to become a mainstream residential real estate segment in India and emulate the demand seen in global markets.
