South Korea is rapidly aging, and the demand for high-quality senior living facilities is growing. With a focus on providing luxury accommodations for the wealthy Generation X, both startups and established companies are racing to capture a share of this emerging market.
Elder-Care startups rush to build high-end senior homes
Elder-care startups are seizing the opportunity to cater to wealthy retirees. Caredoc, a Korean startup providing senior care services, recently partnered with the Korean branch of Inspired Healthcare Capital (IHC), a U.S. company managing over $1.5 billion in senior living assets. Together, they plan to develop a senior town in Korea, featuring amenities comparable to those of a six-star hotel, aimed at Generation Xers in their 50s and 60s, according to The Korea Economic Daily.
Generation X, born between 1965 and 1979, is set to begin retiring in the next five years. They are anticipated to become the next group of affluent retirees following the Baby Boomers in Korea. Caredoc is among several startups capitalizing on the potential of the privately funded senior housing market, which is expected to flourish with the retirement of Gen Xers.
Other startups and companies enter the market
In April, Caring Co., another South Korean startup offering senior care services, signed a memorandum of understanding (MOU) with SDAMC, a local property developer, to create a new senior living community in Magok, western Seoul. Caring Co. also raised 40 billion won ($30 million) in a series B funding round, making it the highest-funded local senior care service startup as of February.
Local Stitch, a Korean co-living startup, is also planning to open senior living facilities for Gen X retirees.
Overview of companies entering Korea's senior living market
Despite the growing elderly population, South Korea currently lacks adequate care and living infrastructure for seniors, having relied primarily on public welfare facilities managed under Korea's Senior Welfare Act. However, the impending retirement of affluent Gen Xers is expected to drive rapid growth in demand for diverse senior living facilities, paving the way for an expanding privately funded senior housing market.
South Korea's senior housing market is witnessing a surge of interest from various sectors, driven by the growing demand for high-quality living facilities for the aging population. As the country prepares to cater to affluent Generation Xers nearing retirement, several types of companies are stepping in to capitalize on this burgeoning market.
The following are some highlights from Colliers' Korea Senior Housing Market report, released in May 2024.
Conglomerate capital
With the profitability of silvertown targeting active seniors guaranteed, capital from large conglomerate corporations in the construction, hotel, and insurance industries is actively flowing into silvertown development projects. For example, Lotte Group is seeking business expansion to lead the silvertown market by utilizing Lotte Engineering & Construction and Lotte Hotel affiliates. There is potential for hotel and supermarket sites owned by Lotte to be developed into silvertowns in the near future. Shinsegae Group also plans to enter the silvertown residential business through Shinsegae Properties.
Construction companies
Large construction firms are entering the senior housing market as new business opportunities arise due to the subdued construction industry. Notable projects include Daewoo E&C's development of 'Baekun Lake Prugio Forest Morning' in collaboration with MDM Group, and Hyundai E&C's planned senior town in Eunpyeong-gu with IGIS Asset Management.
Hotel operators
Hotel chains are leveraging their expertise in hospitality to develop high-end silvertowns. Lotte Hotel & Resort is constructing luxury residential towns in Busan and Magok, Seoul, targeting the upper-income class. Mayfield Hotel plans to transform its hotel school into a senior town.
Insurance companies
Insurance firms are expanding into the senior housing market to counter reduced profits from low birth rates and an aging population. Companies like KB Insurance and Shinhan Life are actively seeking investment opportunities in silvertowns. KB Golden Life Care has already established successful operations with facilities like Wirye Village and Seocho Village.
Asset management companies
Asset management firms are also eyeing the senior housing sector. IGIS Asset Management, in partnership with KB Golden Life Care, has opened silvertowns in Seoul and plans to develop more. These collaborations aim to increase the supply of senior living facilities through new investment funds.
Co-Living operators
Co-living companies are extending their reach into the senior housing market, targeting active seniors. Operators like Homes Company and Local Stitch are developing shared housing sites for seniors, providing affordable and flexible living options.
This diverse influx of companies underscores the significant growth potential in South Korea's senior living market, driven by a rapidly aging population and the anticipated demand from affluent Generation X retirees.
As South Korea's senior living market evolves, both startups and established companies are positioning themselves to meet the needs of a growing and affluent elderly population.
Source: The Korea Economic Daily, Colliers
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