Senior Living: The Next Big Thing in Indian Real Estate

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Senior Living: The Next Big Thing in Indian Real Estate

Kotak Insights | Date 08/06/2024

For years, the Indian real estate sector was in distress.

But things are changing quickly, and the sector is all set to have its day in the sun.

As of today, the Indian real estate sector is fuelled by affordability and strong end-user demand.

The demand for large commercial real estate buildings, such as office towers in big cities, has rapidly increased as companies try to reverse the work-from-home trend.

Within the real estate space, there’s an under-the-radar segment that few people are gung-ho about.

The growth in this sub-segment could fuel the entire real estate sector sentiment.

The segment being referred to is the senior living market.

While larger and well-capitalised players are solving housing problems, an entire ecosystem of companies is specifically involved in the senior living market.

According to an ET report, the senior living market in India is expected to reach around US$12 billion by 2030, up from its current size of US$2–3 billion, with a rising median age and aging population.

According to the most recent data, many senior care startups are emerging.

They have started channelling all their efforts into burning money, just as startups do whenever there is a boom in any space. However, in the long run, these startups may achieve fruition.

We first saw this happen with drones in 2020, when people realised the multiple use cases of unmanned aerial vehicles (UAVs). Drone startups boomed.

Then this happened with defence and artificial intelligence. There are countless startups involved in this space right now.

Similarly, some of the startups involved in the senior care space recently raised funds because they got serious traction from customers.

India is expected to experience a significant surge in demand for senior care and housing facilities in the next three decades. This is not just a random assumption but an eye-opening study that reveals that of the total 2.1 billion people aged 60 years and older worldwide, around 17% are from India.

Of course, it’s going to be an uphill task. Right now, the organised sector has a roughly 1% penetration rate. In contrast, the US, UK, and Australia have well-established senior living markets with a 6-7% penetration rate.

They have an added benefit due to a lower population base, meaning a smaller demand-supply gap.

There’s also a big misconception that seniors will be depressed. This is because we don’t operate the same way as the US or other countries where individualism trumps everything and kids move out when they turn 18.

With different social values, this theme is unlikely to become the norm soon.

However, the trend is that more and more children are shifting overseas.

Many people who moved to the US have settled there, but their parents don't want to move. They prefer a community rather than staying alone in their apartment with no house help.

So, the way we see it, there are three main challenges to overcome:

Community

An ideal senior living community should foster interaction, support, and accessibility, addressing common feelings of isolation among seniors.

Companionship

For seniors, having companions—whether peers, caregivers or even pets—can offer emotional support and increase engagement in daily activities.

Assisted Living

Assisted living combines housing, support services, and healthcare designed to respond to the individual needs of those who require help with daily activities but do not need the intensive medical and nursing care provided in a nursing home.

With the rising senior living population, senior living is bound to pick up in India.

Unlike old-age homes, senior living homes are large townships that maintain and take care of the needs of the elderly.

Currently, companies like Ashiana Housing and Max India are leading this race with their niche product offerings in the senior living space.

But we won’t be surprised to see many more realty players commit a huge sum towards the senior living space as the theme picks up.

Watch this space for more!

Sources and References:

Disclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read the full disclaimer here.

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