Real estate seeing new consolidation, changing senior living spaces in Bengaluru

Godrej Properties has sold one of its six towers at the Godrej Royale Wood project to a mid-scale real estate developer, Manasum, in northern Bengaluru for over Rs 100 crore. The tower, sprawling over 1.7 lakh square feet (sq ft), has 191 apartments designed for senior living, starting from Rs 46 lakh, as confirmed by Manasum.

Experts say several prominent builders have started building assets and creating sub-assets (by exiting partially or entirely) like senior living, affordable housing, or even co-working that become attractive for both homebuyers and developers. This, in turn, helps local developers to absorb the inventories either through a complete buy-out or partnerships.

The senior living apartments will be handed over in the first week of June with 1 BHKs priced at Rs 46 lakh and 2 BHKs at Rs 60 lakh, Sumathy Anantharam, Managing Partner, Manasum Retirement Homes, told Moneycontrol.

Senior living projects already undertaken by Manasum in other parts of Bengaluru are luxury apartments with special features for better accessibility. Along with wheelchair-friendly doors and anti-skid flooring, the bathrooms are fitted with grab-bars for safety. Such senior living apartments also have emergency bells in every unit and a public announcement system in the common areas for emergencies.

Additionally, there are in-house nursing facilities and physiotherapy rooms for immediate assistance. A senior-friendly gym in the project can be used by all senior citizens.

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The maintenance cost for such apartments is slightly lower than those in regular projects, though this varies from project to project.

Enhanced integrated development

The idea of advanced integrated developments is being widely implemented abroad in Japan, and even in Australia. In Japan, specifically, no-bath apartments designed by developer Sento Gurashi and stacked mix-use apartments in Tokyo by KOMPAS allow multiple functionalities to be expanded in dense areas.

"However, the implementation is different in India. Today, we have already seen retail coming up inside townships. However, such integrated developments are fewer," Amit Goenka from Nisus Finance added.

Umakant Y, Director, Advisory Services, Colliers India explained that townships, as per city bylaws, are spread across 100 acres or more, but these smaller enhanced developments can be within much smaller land parcels and offer attractive amenities.

“Another reason for this evolving integration is the volatility and risk factor involved in Indian real estate today. Most developers will put less than 50 percent of equity and the rest is invested through debt. Especially, when the land holding cost is surging today, several developers are trying to exit within three years to avoid the interest component,” he added.

Goenka said that in such a scenario, such models of development ensure that a project is not meant for a particular socio-economic segment but for a plethora of homebuyers, along with an array of services that adds value to the development.

Additionally, experts say managers can monetise assets with a high cap rate, a rate that helps in evaluating a real estate investment. For example in Mumbai, it has a 2 percent yield, and about 4 percent for Bengaluru. But in the case of senior living, the yield can go up to 8 percent.

However, Umakant added that Indian real estate will take a decade before imbibing this model of consolidation, given that the developers hold certain acceptance.

Goenka believes such consolidation will restructure the sector with growing models of enhanced integrated development, especially with the senior living sector facing financial challenges in India.

“Most seniors in India do not have options to mortgage or reverse mortgage their current properties and are also unable to buy an apartment blocking their life savings. Less than 5 percent of all target audiences opt for senior living in India,” Goenka explained. However, in integrated projects where senior living is being offered alongside usual apartments, most families will opt to buy both apartments, he added.

Scope of senior living

With high rentals across senior living apartments in India and little support from banks, investors say standalone senior living apartments are faulty real estate models.

As per ANAROCK research, as of 2021-end, there were as many as 57 senior living projects (developed or ongoing) across the country by the top 12 players in this segment. Of this, 61 percent were in tier 2 & 3 cities and the remaining 39 percent were in Tier 1 cities.

COVID-19 reshaped the future of the senior living segment in India, with demand reportedly rising. But currently, there is only limited supply in this segment, said Prashant Thakur, Director and Head, Research, ANAROCK Group.

Goenka added that the concept of having a sub-asset as senior living has been less explored by developers and only a handful of service partners can carry it out across India.

However, Umakant said that with changing social space in India, the retirement age has come down to 50 or even less. “Such integrated developments provide opportunities for people to own a personal space and enjoy special amenities, especially from Grade A developers and branded service partners.”

But experts agree that it makes little difference to the affordability, often a few lakhs. However, the amenities and special services, such as two clubhouses and special amenities in the case of the Godrej project, will attract homebuyers.

Kushal Ramesh, a partner at Manasum, said the company already has another greenfield senior living apartment in southern Bengaluru. “It was launched two years back. However, it becomes difficult for smaller developers to pour extensive capital into such projects. Additionally, today’s seniors have their own demands to stay inside the city and close to bustling corners. Hence, we decided to extend the idea of serviced apartments," he added.

Ramesh explained that for smaller developers, a partnership is more practical than a complete buyout at an early stage, as huge capital is involved. “We only do buyouts for projects that are nearing completion and have proper senior living designs in place,” he added.

Anantharam said that Bengaluru has the potential to absorb 10,000 units of senior living apartments over the next five years. "By next financial year, we will add 500 more units in Bengaluru and Mysore. We are already in talks with two developers to explore the integrated concept," he added.

Godrej Properties could not be reached out for comments. A list of questions has been sent to the company, and Moneycontrol will update this article after receiving its responses.