Developers eye retirement housing to capitalise on Việt Nam’s aging population

Việt Nam needs to develop policies to encourage investments in retirement homes as the population is ageing rapidly. — VNAVNS Photo Minh Quyết

HÀ NỘI — Major real estate developers are looking at investing in the retirement housing market to capitalise on Việt Nam’s ageing population with increasing demands in both quality and quantity of healthcare services for the elderly.

According to the United Nations Population Fund (UNFPA), Việt Nam is one of ten countries with the fastest population ageing rate in the world.

People aged 60 and over are predicted to account for 25 per cent of the country’s population by 2050, up from 11.9 per cent in 2021. By 2036, Việt Nam will be an aged society.

This demographic change is due not only to reduced mortality and increased life expectancy but also largely to the sharp decline in the birth rate.

Data from the General Statistics Office (GSO) showed that the birth rate dropped by half in the past 30 years, from 3.8 children in 1989 to fewer than two children in 2023.

During the 2009-19 period, while the total population increased by 1.14 per cent, the elderly population increased by 4.35 per cent per year.

The ageing population poses significant challenges across all socio-economic aspects, including a shortage of young workers, declining productivity, and the need to develop nursing homes to meet demand.

Statistics showed that the proportion of elderly people living on their own is also growing, increasing from 9.68 per cent in 2009 to 13.74 per cent in 2019.

A survey by the UNFPA and the GSO showed that about 36 per cent of elderly people said that they and their families are willing to pay for elder-care services.

Despite high demand, the number of retirement homes remains modest. Findings of Bảo Việt Insurance Company showed that only 32 out of 63 provinces and cities in Việt Nam have nursing homes.

According to the Việt Nam Association of Real Estate Brokers (VARS), there are around 400 nursing homes in the country, about 50 per cent being charity or State-invested.

Private capital steps in

Phạm Thị Miền from VARS said that there are significant opportunities to develop retirement real estate in Việt Nam to meet the demand for nursing care and health care to improve the quality of life of the elderly. This becomes pressing, especially when the family structure in Việt Nam is changing so dramatically, with the proportion of elderly people living with their children decreasing in both urban and rural areas.

Major property developers are stepping into the retirement housing market to capitalise on the opportunities.

In March 2024, Vingroup signed a cooperation agreement with Japan’s Well Group to develop a world–class health care centre for the elderly in Hà Nội.

In early August, Sun Group also started the construction of the Sun Urban City project in Hà Nam, which also aims to develop products for the elderly where they can enjoy comprehensive healthcare services with a nursing home area and a specialised hospital.

Miền said that these models can meet only a modest part of the demand of the elderly living in urban areas. In addition, the nursing care costs at these models might be higher than the average income in Việt Nam.

Thus, the Government needs to raise policies to encourage investments in the development of nursing homes in Việt Nam, she said.

VARS proposed that tax incentives should be given to developers of retirement homes, especially in terms of exemptions and corporate income tax reductions for the first years of operation, to reduce investors’ costs and financial risks.

In addition, retirement homes should be considered special housing types like social housing, which should be given preferential loans for development and operation. Policies should also encourage foreign investments in the retirement housing market.

Incentives for land use, especially in areas with high demand, and reductions in fees for converting land use to develop retirement homes should also be considered.

Nguyễn Văn Đính, VARS’s Deputy President, said that it is necessary to build a clear and transparent legal framework about standards and operation criteria for nursing homes.

Public-private partnerships (PPP) should be encouraged in developing retirement homes, Đính said, adding that private enterprises should be allowed to operate existing State-owned nursing homes.

According to Troy Griffiths from Savills Việt Nam, there are many levers to support the development of retirement real estate.

He said the traditional family model is gradually evolving, providing great opportunities for the development of the retirement housing segment.

Trần Thị Thuý Nga, deputy director of Diên Hồng Nursing Home Centre, said that the Government’s support is important to promote the development of retirement homes in Việt Nam and make the elder care services affordable to a majority.

In addition, policies should be raised to develop human resources for the nursing services, she said, adding that there is a severe shortage because the job is hard, but the salary is low. — VNS