MUMBAI / DNA Money / Home / Money / May 16, 2011
By Vishwanath Nair
LIC Housing Finance aims to have a pan India-presence for its retirement homes business as rising demand from senior citizens prompts the company to scale-up presence in other cities across the country.
The country’s fourth-largest mortgage lender has completed two projects, one in Bangalore and the other in Bhubaneswar, and believes this “futuristic idea” will lead to the home finance company eventually spinning off its care home business into a listed entity as early as 2014.
“We expect to make the care homes business a fully contained, listed entity in the next three to five years,” V K Sharma, chief executive officer of LIC Housing finance, told DNA in an interview.
LIC Housing Finance, promoted by the country’s largest insurer, the Life Insurance Corporation of India, is looking for a presence in up to seven cities, which it says are more “friendly to the senior citizens” and where it can get land at concessional rates. The company recently completed a 98-unit project in Bangalore and a bigger 200-unit project in Bhubaneswar.
LIC Housing Finance, Sharma said, is currently in process of acquiring land in Jaipur, Haridwar and Goa. “More cities (including Nagpur and Pune) which have historically been friendly to the retired people will be looked at.”
India has 65% of its people aged between 15 and 64 years, making many like Pranay Vakil, chairman of Mumbai-based real estate consultants Knight Frank India, believe that the business model might find many takers.
In a country where nearly 65% of the population is in the age group of 15-64 years, the business model might just find many takers. “Life expectancy of an average Indian has also gone up by 58-80. So, about 16% of our population will fall in this bracket, in the near future,” said Vakil.
“Life expectancy of an average Indian has also gone up by 58-80. So, about 16% of our population will fall in this bracket, in the near future,” reasons Vakil.
Retirement homes are built in a community format with modern facilities including gyms, club houses, music rooms and auditoriums. These units also come with a house-help which is offered by the developers or owners themselves.
“These are considered by NRIs (non-resident Indians) for their parents living in India and they would give an arm and a leg for somebody who can take care of their parents comfortably,” Vakil says.
Pune-based developer Paranjpe Schemes, which recently forayed into care home business, has built 1000 luxury retirement homes across Pune and Bangalore and is now planning to expand it to Mumbai and Hyderabad.
“We were in this business as part of our CSR (corporate social responsibility) activity, though now it is in our revenue model,” said Shrikant Paranjpe, director, Paranjpe Schemes.
Another factor that is attracting developers to this space is the rising number of nuclear families in the country. According to the National Family Health Survey of 2005-06 (NFHS-3), three out of five households, or about 63%, are nuclear. “In this changing social environment, where taking care of the seniors is posing difficulties to the young generation, concepts like old-age homes or retirement resorts are becoming popular,” said Saumyajit Roy, assistant vice-president- strategic business unit, at real estate consultancy Jones Lang LaSalle.
Some, however, are sceptical if this idea will find favour from the other private players as they cite the issue of getting land at cheap rates to be the most critical factor for the success of these projects.
Sharma too agrees. “To get land at concessional rates is the key for such projects.”
Vakil of Knight Frank believes that if someone enters the business with proper understanding of the market and some basic planning, then the idea can be largely successful.
©2011 Diligent Media Corporation Ltd.