Ageing private home owners want ability to cash out on houses

OCT 31, 2017


SINGAPORE'S ageing population offers developers opportunities to build private senior homes despite challenges, according to a report by Edmund Tie & Company Research.

In making its case, the report ticked off several key facts: One in four Singaporeans will be 65 years or older by 2030; lifespan at 65 improves 1.9 years to 20.8 years in 2016; more elderly-friendly public infrastructure will be built; retiree household income will rise, especially for the more well-to-do; and currently there's a shortage of private housing for seniors in Singapore.

There are also challenges and one of them is the ability of private home owners to cash out on their housing assets, according to the six-page report Senior Housing In The Private Sector: What Shape And Form?.

"An ageing but affluent Singapore population offers opportunities for the private sector, especially if they can look at ways to monetise the equity locked in their housing asset," it said.

While there are channels for residents of public housing to monetise their flats, the options open to private home owners are few. The report noted that the reverse mortgages offered by financial institutions like OCBC Bank and NTUC Income in the private sector have not panned out.

"It is likely that the strong bequest motive discourages senior home owners to pursue the reverse mortgage option."

The report added that it would be unpalatable for private home dwellers in the middle- to high-income bracket, especially if they are used to the living space or want to age in place, to downsize or move into HDB flats to unlock their home's equity.

Social stigma linked with senior housing and buyers might also deter the development of private senior housing projects, which will have to be equipped with elderly-friendly features.

The report said while such features would command higher demand over time, it might take buyers even more time to change their mindsets and see them as value-added.

Still another challenge for developers of private senior homes is insufficient supply of nursing homes for the elderly.

The report said active adult communities such as those found in the US, while they provide amenities and space for older residents, might not be ideal for Singapore given its high land costs. Neighbouring countries might offer better options.

Adult communities are also likely to be less accessible to middle- and lower-income elderly individuals in Singapore, the report said.

"If Singapore were to build such active adult communities vertically, it would be affordable only to individuals who are in the middle-upper income bracket," it said. "The buyers are likely to come from the retiring private home owners, who tend to have higher expenditure."

The report said a more viable business opportunity for developers is to provide co-living spaces for retiring singles. "While most co-living spaces have thus far focussed on millennials, they can serve as a viable option, especially for the elderly singles."

Co-living spaces are more affordable because the costs of accommodation and service are shared, the report added. "The support of cohabitants will also help improve and preserve the social and mental capital of the elderly single households."