Retired comfortably: Old age homes that are worth the investment

Such properties are designed for the elderly and give them company and security

Arun Parthasarthy (name changed on request), 61, and his wife recently sold their house in Chennai and moved into a retirement community in Coimbatore. “My children have settled abroad. Our house was large and becoming difficult to manage. We decided to move to a housing project where my spouse and I would not have to worry about daily chores,” he says. Like Parthasarthy, a growing number of senior citizens are choosing to buy a house in real estate projects that cater to their needs.  

Growing demand, limited supply

One factor driving the demand for such homes is demography. “According to projections from the Census of India, India’s elderly population is expected to reach over 20 per cent of the population by 2050,” says Karan Singh Sodi, senior managing director-Mumbai Metropolitan Region & Gujarat, and head–alternatives, JLL India. Ankur Gupta, joint managing director, Ashiana Housing points out that today’s affluent seniors present an economic opportunity, and hence investments are flowing into projects tailormade for them. The Covid-19 pandemic, during which many senior citizens without families struggled, has also intensified the demand for housing that comes with specialised care.  

Currently, according to ANAROCK Research, as of June 2023 there were only 62 senior living projects (developed or ongoing) across the country. Says Santhosh Kumar, vice chairman, ANAROCK Group: “At least five new projects are under construction: two in Bengaluru, and one each in Chennai, Kolkata and Coimbatore.”

Promise of hassle-free living

These projects allow seniors to live independently. Says Colonel (Retd.) Achal Sridharan, founder and managing director (MD), CovaiCare: “Daily chores like food, dishwashing, laundry, etc. are taken care of and service providers like electricians, plumbers, etc. are easily available.”

These projects and dwelling units are designed keeping in mind the needs of seniors. Says Rajit Mehta, MD and CEO, Antara: “They feature wheelchair-accessible layouts and are equipped with several safety-enhancing elements.” Access to healthcare is readily available.

Seniors get the company of peers belonging to the same age group. Says Mehta: “These communities prioritise social engagement through activities, outings, and communal events.” These projects also come equipped with enhanced security measures.

Such housing could offer potential financial benefits. Says Mehta: “Given rising demand, such properties could fetch an attractive resale value.”

Premium pricing

The overall cost of such housing, according to Kumar, depends on the type of facilities offered, the level of care required by the inhabitants (independent or assisted living), project location, grade of builder, and so on. Since they are equipped with several services and facilities, they are priced at a premium compared to standard homes. Says Gupta: “The price difference ranges from 10 to 30 per cent.”

Be aware of restrictions

Many of these properties are located at the periphery of the city, which could make access to relatives and friends, and even the city’s top hospitals, difficult. There could be restrictions on the duration for which younger family members can stay. “Owners wanting to rent their houses will have to find a tenant in the senior age bracket,” says Vaibhav Suri, partner, Luthra and Luthra Law Offices India.

If the management quality deteriorates, the dwellers’ experience will take a nosedive. Resale value could plummet if the society is not well maintained. Says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors: “Since they can only be sold to other seniors, selling and exiting would be more difficult than imagined.”

On the owner’s demise, the property will pass on to the heirs. “But they may not be able to use it unless they are senior citizens,” says Suri.

Switching houses entails a cost. “Selling one house and buying another could mean a transaction cost of around 7 per cent,” says Avinash Luthria, Sebi-registered investment advisor (RIA) and founder, Fiduciaries.

Checks you should run

Before making a purchase, Gupta suggests doing thorough research, including feedback from current residents, on the project’s reputation. Seniors must ensure the project can cater to their changing needs. “Once they enter the 70s, they may need assisted living facilities. They should check whether the project provides such facilities,” says Luthria. Sodi advises doing a deep dive into the medical facilities, equipment and critical services available within the campus. Suri suggests understanding the terms and conditions of the society’s bylaws before making a commitment. Potential buyers must evaluate the monthly maintenance fees and service charges, which can be hefty. According to Dhawan, seniors should, if possible, live in such a community on rent before making a commitment. Above all, he says, this move should not deplete their retirement corpus to dangerously low levels.