Home / Money / Calculators /  What’s the real cost of retirement homes?

Two years from his retirement in 2000, Hari Sundaresh, working at World Bank in Washington, decided to buy a house for himself and his mother back in India. At 58 years of age and with a 73-year-old mother to tend to, he chose a project specifically meant for senior citizens, which came with round-the-clock medical care.

That the surrounding infrastructure and location were good and, like all gated communities, the security rules were stringent only helped him take the decision. Athashri, the project in which he bought into, is 10km from Pune city and has been developed by Paranjape Schemes (Construction) Ltd, one of the few developers tapping the retirement homes concept in India.

Under the senior living concept, there are two categories—independent living and assisted living. In assisted living, you will get 24x7 services and this is meant for those senior citizens who need help. Independent living is for active senior citizens who can take care of themselves. Most retirement projects provide both the facilities in the same space. According to an April 2013 updated report titled, Senior Living Sector in India, by Jones Lang LaSalle India, currently there are 30 completed retirement or senior citizen projects in India. Bangalore has seven such projects, the highest in India, and there are 30 more such projects in the pipeline across the country.

Though the concept is still tentative in India, some like Sundaresh like the idea. More than a decade later, he still lives in the same society and is quite satisfied with the services. “I wanted a stress-free life and liked the concept, which has worked for me," said Sundaresh. While they do offer a range of facilities, these come at a cost and carry certain restrictions.

The facilities

Medical care: Since these are specialized projects, focused on the needs of senior citizens, especially medical care, they work for people like Sundaresh.

The medical facilities vary from project to project. Also, the facilities may be different for independent and assisted living projects, though most of them have a similar set-up.

Ankur Gupta, joint managing director, Ashiana Housing Ltd, said, “The medical facilities that we provide include 24x7 ambulance service, physiotherapy, a round-the-clock nurse and OPD (out-patient department) service, among others."

So what should you look at? “Ideally, the hospital should not be more than 20 minutes drive from the retirement home," said Om Ahuja, chief executive officer (residential services), Jones Lang LaSalle India, a realty consultancy.

Usually, developers have tie-ups with medical care providers. For instance, for healthcare, Tata Housing Development Co. Ltd in Bangalore has tied up with Apollo Healthcare Ltd for all the services.

Shashank Paranjape, managing director, Paranjape Schemes, which manages Athashri, said, “We have tie-ups with three hospitals."

Food: Most retirement homes provide a mess facility. Says Muralidhara Bhat, care home manager, Ashiana Utsav Care Home, an assisted living project by Ashiana Housing Ltd, “We have a basic menu which is designed based on senior citizens’ nutritional needs. For people who have special needs due to their illness, we even provide customized food."

The charges for this facility varies from builder to builder. For instance, Athashri’s mess charges 45 per lunch plate, whereas Ashiana charges 60 per mini thali and 80 per thali. But cannot be compared one-on-one as the food quality and other factors differ.

How is the quality of the food? Says R.C. Gharia, a 66-year-old resident of Ashiana in Bhiwadi, who retired as a general manager with MRF Tyres Ltd, “I am diabetic and need a certain diet, which is taken care of at the cafe itself. They charge 60 per lunch." He frequents the cafe as he lives alone.

Feeling at home: The biggest facility that these homes provide is the emotional comfort since they are not the typical old age homes, which remain a taboo in our society. Manoj Tyagi, vice-president, Ashiana Housing, said, “While it has all the medical facilities, it should not look like an old age home or a nursing home. People should feel at home."

So is it really different than an old age home? Says 64-year-old Asha Bhatia, a resident of Ashiana in Bhiwadi, “There is a misconception that a retirement home is like an old age home. Here I have more friends and more activities." Bhatia has been living in the retirement home with her 68-year-old husband K.L. Bhatia since 2011.

The restrictions

But then for all the facilities, you need to pay a price in terms of real money and certain restrictions.

Age limit: Unlike in an ordinary project, here only people above the age of 55 years can reside. If your spouse is below the age of 55 years, she can live in the retirement home as well.

If you have kids, they can visit you. Though there is a limitation on visiting days of around 60-90 days. Says Pushpa Sharma, a 62-year-old, another resident of Ashiana senior living project in Bhiwadi, “My husband had a transferable job throughout his professional life, so we were always travelling. Hence, he never had a friend circle as such. After moving here, we got to know a lot of people. I find it more convenient to stay here rather than with my daughter as here we can do our own activities at our own pace." When asked if she misses staying with her daughter, Sharma says, “Not at all. Her place is just a one-hour drive from here." She stays with her 70-year-old husband, Naresh Chandra Sharma.

Inheritance and resale: Like any other project, your child can inherit the house. However, she can’t live here until she becomes a senior citizen. That means she will have to either keep it shut or rent it out compulsorily to a senior citizen until a certain age.

Mathew Cherian, chief executive officer, HelpAge India, said, “The retirement homes are for people who are wealthy or have non-resident Indian children who can afford to buy these properties for their parents and a separate one for themselves."

Also, if an heir wants to sell the property, the new resident should be a senior citizen. This may accentuate liquidity problems that the real estate asset already faces. Amit Kukreja, a Delhi-based financial planner, said, “Considering that only senior citizens can rent it out or the new owner who resides in these house should be a senior citizen, it makes the property more illiquid. This is because people who rent will be those who have an income. So when the category that earns is removed, you will have fewer options."

Costs: If you are planning to buy a retirement home, you will end up spending more than what you spend on a normal house in the same locality. Says Paranjape, “The retirement project in Pune sells at a 40% premium compared with usual residential projects in the same area. For instance, if our usual residential project costs 5,000 per sq. ft, the retirement project costs 6,500-7000 per sq. ft in the same area because there is dearth of such projects." Another example is Tata Housing Development Co. Ltd’s township in Bangalore. While the usual residential houses cost 3,400 per sq. ft, the senior living units cost 3,950 per sq. ft.

Generally, developers sign an annual contract with residents for maintenance, food and security services. The annual maintenance cost typically varies between 15,000 and 60,000. Here, the problem is that even if you don’t need specific services, you would have to pay the annual maintenance as it has a flat charging system.

Electricity, food, water and other services are charged based on actual consumption.

No guarantee of hospital services: Though the projects provide medical facility, they desist from taking any responsibility.

Rajeeb Dash, marketing head, Tata Housing, which has a tie-up with Apollo Hospitals, said, “The medical services will be provided by Apollo Hospitals, but Tata Housing doesn’t take any guarantee of the hospital services."

Paranjape said, “We take the responsibility of taking the residents to the hospital." The hospital that Paranjape Schemes has tied up with allows cashless admission for their residents.

Gupta said, “The guarantee of the services depends as we are not into the medical business. We provide only comfortable lifestyle."

In other words, if you are not happy with the services of a particular hospital but your project has a tie-up with that hospital itself, you are not left with much choice. Typically, a single project has a tie-up with at least one hospital, so your choice becomes limited in that sense.

Then there are residents who visit their family doctor. Says S. Bapat, who lives is Athashri in Pune, “I continue visiting my family doctor for my medical needs. Only if there is an emergency do I go to the resident doctor in the society."

What should you do?

To get an idea of the concept and whether it suits you, you can start with renting the space. Anil Rego, a Bangalore-based financial planner, said, “As you will be spending around 10-20 years in the retirement home, go slow on the buying process. You can rent it out first to get a feel of it."

And never look at it as an investment. Surya Bhatia, a Delhi-based financial planner, said, “You can’t look at a retirement home as an asset class for investment as it is a concept focusing on comfort."

Cherian said, “I think the current retirement model is not right for India. People in India don’t have enough money to buy. Retirement homes are more of a money making venture." Many developers seek the opinion of HelpAge India to create the layout for retirement homes.

If you get a project where the services are to your liking, you may want to shell out extra for the comfort. But make sure they are all worth it.

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