Investors bet on ending China's retirement home stigma

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STORY: Investors are betting big on a major attitude shift among elderly Chinese.

That they will warm up to the prospect of retirement homes as the world's most populous country ages and smaller families struggle to support parents and grandparents.

Pensions in China are tiny.

It has made care of the elderly one of the major headaches faced by policymakers, who are dealing with the first demographic downturn since Mao Zedong's Cultural Revolution.

Costly nursing homes are out of reach for most, and their use is seen by many as a sign of children not fulfilling their duties.

But companies investing in China's retirement home sector hope that those attitudes will change soon, and fast.

This is Louis Lim, CEO of Singapore-based Keppel Land, which is building a 400-bed retirement property in Nanjing that is due to open this year.

"I think however you look forward, with the one-child policy that China has had in the past, you do have that kind of structure in the family where there’s one child with two parents and four grandparents. And so, the ability for an individual to take care of so many people becomes a lot more challenging. And as a result of this, I do think that the stigma is going away quite quickly."

The National Development and Reform Commission and the Ministry of Human Resources and Social Security did not immediately respond to requests for comment.

Though the government did say last year that it would spend 35 billion yuan ($5.1 billion) to build retirement facilities.

And President Xi Jinping has called for the development of elderly-care services and the pension system, a state news agency said this week.

Currently, about 90% of elderly Chinese are cared for at home, about 7% rely on community-level assistance in day-care and other facilities, and only 3% live in retirement homes.

China's National Health Commission projects the number of people aged 60 and over will grow to 400 million in 2035, from 280 million now.

Even if those percentages don't change, 40 million beds will be needed in community facilities and nursing homes, up from 8 million now, analysts say.

Investment though is not without risk, with executives citing a shortage of skilled staff.

And it relies heavily on attitudes changing.

86-year-old Shanghai resident Mr Ju says he won't go to a nursing home. Even if I wanted to go, my children wouldn't agree, he says. They don't really trust nursing homes.

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