Retiree William Tang recently decided to swap his life in downtown Shanghai for a luxury elder-care development in the city’s far west, paying $220,000 to rent a two-bedroom apartment for 15 years.
“It is more like a resort,” Tang said after viewing the Ardor Gardens showroom, which highlights amenities including an indoor swimming pool, yoga rooms, wine tastings and round-the-clock care.
For a growing number of Chinese and international investors, elder-care developments like Ardor Gardens are becoming irresistible bets. Money is pouring into the sector amid renewed attention on just how quickly China is aging.
Sydney-based property and infrastructure company Lendlease Corp Ltd., which put $280 million into Ardor Gardens, is among investors that see the policy environment becoming more favorable as the Chinese government tackles its demographic challenges.
“The market will likely be completely different 10 years from now,” said Lendlease’s China President Ding Hui. “If you wait for 10 years before starting to think of buying land, learning, training up a team and developing a business model, very likely you would have missed the opportunity.”
According to China’s latest population data, the number of residents aged 60 and above has risen 47% over the past decade to 260 million, more than 18% of its total population. By 2050, it is forecast to nearly double to almost 500 million.
Lendlease is in competition with established domestic players including blue-chip insurers, private-equity firms and property developers. Dozens of foreign investors have also piled in in recent years, including Singapore’s state-owned Temasek Holdings Pte, U.S. health-care investment firm Columbia Pacific Management and Fortress Investment Group.
More are looking to join the fray. Chinese investment giant Citic Capital is aiming to build a handful of elder-care projects with partners in major cities over the next few years, said the head of the firm’s real estate division Stanley Ching. New China Life Insurance Co. meanwhile just started selling a new 280,000 square meter (3 million square foot) elderly-care complex in a suburb of Beijing — roughly the size of 40 standard soccer fields.
Many of these companies have yet to make money from the senior-care business, but they’re betting that growing demand for such facilities and changing societal norms in China will deliver returns in the longer term.
On the policy side, the government is drafting detailed plans to strengthen the senior-care sector, with a focus on expanding basic and affordable services. These include increasing the number of beds at nursing homes, and putting resources into training much-needed professionals.
“China’s high-end senior care market has not entered the phase of high-speed growth, but it has certainly gotten started,” said Ye Liming, a director at the Shanghai Senior Service Industry Association.
Looking for a Bed
Elderly-care bed supply in China falls far short of demand
Source: Ministry of Civil Affairs, Qianzhan Industry Research Institute
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The country’s demographic trajectory is also upending deep-set traditions that have impeded the popularity of care homes. Though children in China have long been bound by the duty to care for their elderly parents, many families live far apart following years of labor migration and urbanization. The problem is exacerbated by the fact that many soon to enter retirement only have one child to rely on due to China’s one-child policy.
Despite these demographic shifts, industry estimates predict that only around 3% of Chinese seniors are willing or are able to afford the sorts of services that Lendlease is offering. The vast majority are expected to stay at home or at government-subsidized nursing homes. Though that’s still a large enough number given China’s massive elderly population, the low figure does signify a difficulty for investors.
As of June, Lendlease had only managed to fill about a quarter of the first 100 or so apartments at Ardor Gardens that it put on the market about 10 months earlier.
In a recent report, consulting firm Qianzhan Industry Research Institute noted that the occupancy rate of private elderly homes, mostly located in wealthy areas such as the Yangtze River Delta, is hovering at 37%-48%, far below the 85% they need to break even. Customers are deterred in part by the cost, due to high land prices and the absence of a real estate investment trust market — a key long-term funding channel for elder-care property investors in developed markets like North America, Europe and Japan.
Lendlease’s Ding believes that getting dozens of seniors to part with their money for a rental property in Ardor Gardens is significant, given the pandemic. More notable, he thinks, is that the mentality that seniors should spend their savings on owning a property in order to pass it down to the next generation — rather than on their own leisure — could finally be starting to shift.
To that end, Tang, who is in his 70s and anticipates moving in to Ardor Gardens in September, is the sort of retiree that investors are banking on — cash-rich, open-minded, and looking to have fun in their twilight years.
“Our purpose is not to just spend money buying a property,” said Tang. “It’s for a more exciting second life.”
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
