VILLAGES FOR PENSIONERS
The residence format “55+”, long customary for
European countries with their high living standards in
retirement, are for now a rarity in Moscow.
In answer
to the “whys” the developers cite these numbers. In
Russia the retirement age for women is 55, for men –
60. For comparison, in Germany men and women
retire at 67; in Japan – 70. The number of pensioners in
European countries totals approximately 20–25% of
the total population and grows at the rate of 2% a year.
In Russia there are approximately 40m pensioners
(25%), their average lifespan is 16 years: 13 years for
men and 23 years for women. In Russia the government
puts 8.6% of GDP towards pensioners’ needs,
versus, for example, 20% in Australia, 22% in Japan
and 28% in Austria. In Russia pensioners mainly have
to rely on themselves and relatives; thus space for commercial
projects opens. According to Nikolay Vecher,
director of GVA Sawyer’s St. Petersburg branch office,
partner, the potential number of residents in villages
for retired folks in Russia totals about 1.8m people.
The architecture of such projects can be quite various.
Elderly people’s quality of life is ensured by a certain
set of public facilities: clinics, hospitals, clubs, hotels,
athletic facilities and the professional work of management
companies, which ensure 24-hour medical
service, organizing cultural events, etc. Each village has
a cultural center whose task is to organize residents’
leisure. Experience shows that in the U. S., for example,
the profitability of this form of business reaches 20%.
Developers are geared towards the real budgets of
residents; a luxurious atmosphere is impossible here.
For a comfortable life, a resident needs little. Most
residential buildings in “55+” villages appear modest,
even ascetic. The cost of the average household in
such a village in the state of Florida doesn’t exceed
$50,000 (1.5m rubles), which is quite modest for the
U. S. In Russia the existing experience and calculations
show that zero profits correspond to a payment level
of approximately 700 rubles a day, or 21,000 rubles a
month. Provided monthly payments of 45,000 rubles
profitability totals 23%. Curiously, in state-owned
old-age homes, the level of spending on resident maintenance
is equivalent, which provides the opportunity
for “over 55” commercial properties to take on the
accommodation of such pensioners along with necessary
financing.
The source of such payments may be
the personal earnings of the actual pensioner, or funds
generated from management of this pensioner’s other
real estate, for example their apartment. As a rule, the
management company also takes on management of the apartment, either renting it or selling it by agreement
with the owner, and providing monthly payments from
these proceeds. In Russia there are also examples of
such villages, albeit few, which are implemented, as a
rule, through budgetary funds. For example, the village
created in 2004 with 38 two-family homes in the village
of Ozinka in Saratov region, where the homes cost
$53,000. In Chernomorskaya village, Krasnodar region,
a budget cottage village for 70 people was built, while
a special neighborhood appeared on the outskirts of
Aginsky village, Krasnodar region: two-person homes for 120 veterans. In societal terms this is one of the
most attractive and sensible projects of this format in
Russia. There are also attempts to create private villages
for pensioners. In 2007 a Gazprom project was
developed in Khrustal village, Kaluga region, but it
remained only on paper. A project of St. Petersburgbased
SIB is being implemented in Pavlovsk, a
suburban community, together with the clinic chain
Skandinavia. Pensioner villages cannot pay high rental
rates, so they have to independently build their properties.
«
– It`s difficult to develop projects for
senior folks in Russia. Historically, the
nursing or old age home bears a negative
connotation in Russia, being generally
associated with a horrible, abandoned and
unsafe "hole" where younger folks bring
their elderly parents that they might not
stand in their way. So if you just build a
private establishment nobody will want to
come and live there, for proper marketing
is needed. It should not be forgotten that
there is no Russian business practice in
this area and this means banks will hardly
provide a loan for such a project. You`ll not
be able to prove there is any demand for such
services as there`s no history of sales and
no practical experience of competitors. The
public-private partnership mechanism does
not work either. The main reason is that the
government cannot guarantee the purchase
of your services for many years ahead. Social
insurance is underdeveloped in Russia. In
Europe you choose a retirement home and
the government sends the funds there. We
have nothing of the kind here; what`s more,
the entry barriers to this segment for new
players are rather high. The operational
activity of any old age home is regulated
by six government oversight agencies
– from Rospotrebnadzor and Ministry
of Health to the Center of Hygiene and
Gosstroynadzor at the stage of design and
construction, the medical license being the
compulsory condition. Our cooperation with
Denmark, German (in partnership with BPS
International) and USA was a great blessing
for our project, since the given business is
highly developed there. For instance, we
borrowed their valuable experience in caring
for people suffering from mental debility
(the syndrome whereby the degradation of
memory, thinking and behavior takes place):
here technologies call for a special structural
design. A separate kitchen and cafeteria is
needed per each dozen of patients – simply
because grannies should continue to do their cooking, cleaning, knitting and engage in
other habitual occupations and they need
respective premises to pursue these social
undertakings. This year we are going to
launch our own medical-social practices
under a proprietary brand.
As for the budget, in Moscow and its nearest
suburbs, the cost of a turnkey project like
ours ranges from 0.6 to 1.2bn rubles, with
the yield varying between 10% and 12%. In
other words, the project is capital-intensive
and in need of "long" money. Now there are
three main structural formats in this industry:
independent residence with minimum care;
assistant residence with regular minimum
and average levels of care; nursing care is
needed for those elderly folks who are unable
to take care of themselves. As regards a
cluster of buildings, in case of Monino we
carried out a complete renovation of the
complex, but this was forced necessity. When I
entered that project, the property had already
been purchased. I believe it is necessary to
design and build new "greenfield" projects;
financially, these are comparable figures.
As regards retirement communities or
villages, I believe we are not yet prepared for
this format in Russia. I`ve seen a lot of them,
especially in the US. In Russia assisted and
nursing care will remain the main formats
for the time being. The absolute majority
of more than 30 private pension houses
located in the Moscow region represent
rented cottages. But just go and see how they
run business from legislative perspectives:
where and how they prepare meals, where
they have fire escape and evacuation exits
and fire-fighting systems, how they provide
medical services, having no licenses at all.
They just took private houses and began
doing their business there; but in this case
such buildings changed their functional
use, having turned from a private home
into a public establishment and this is a big
difference. Such buildings must comply with
various SNiP standards, pass the expert
evaluation and get an operational permit
to be used specifically for rendering services
to senior folks. In this country providing
stationary medical, social or nursing services
is regulated by a special GOST. Therefore
rent can be seriously discussed only when it
is lawful; but I personally do not know such
examples.
»
Oleg Fedorov,
General Director of the
management company
«Blagopoluchiye».
CRE #7(205), April 2013
