2024-05-04 01:59:04
[토요기획]Government and construction industry working to revitalize Silver Town
By the end of this year, one in five people will be over 65… Construction companies compete to supply silver homes
Selected as the preferred negotiating partner for the government pilot project… Local governments and universities outside the metropolitan area are also preparing for the project.
Lack of relevant systems – high moving-in fees are a challenge
‘Fire in the instep.’
It is certain that South Korea will enter a super-aging society (more than 20% of the population aged 65 or older) after the end of this year. According to Statistics Korea, the elderly population is estimated to increase from 9.93 million at the end of last year to 10.51 million at the end of this year. The proportion of the elderly population rises from 19.2% to 20.3%.
The speed is also too fast. Korea entered an aging society (more than 14% of the population aged 65 or older) in 2018. In just 7 years, we will have reached a super-aging society. It is faster than not only Western countries such as the UK (50 years), France (39 years), and the US (15 years), but also Japan (10 years), which has a steep aging trend.
Due to this, there is even a gloomy forecast that “Korea’s economic power will lag behind Indonesia and Nigeria in 2050.” This is the result of analysis in the economic outlook report ‘Road to 2027’ published by the American investment bank Goldman Sachs at the end of 2022.
There is a very high probability that population decline and aging will lead to a decrease in housing demand. Lee Yong-man, a professor at Hansung University’s real estate track (real estate economics), said at a seminar on the 23rd of last month, ‘A new real estate market brought about by changes in population structure, is it a crisis or an opportunity?’, “House prices will decline from 2040, when the number of domestic households peaks and begins to decline due to population decline. “We will enter a long-term decline phase,” he predicted.
The construction industry, which was hit hard, rolled up its sleeves to come up with countermeasures. The strategy is to turn a crisis into an opportunity. The government and local governments facing the threat of extinction are also trying to relax related regulations or promote pilot projects in order to secure priming resources.
● Construction industry pays attention to Silver Town
The most active sector is the construction industry. In a situation where it is urgent to find new sources of revenue due to the housing recession, silver towns and senior housing have emerged as a future source of income. The ‘healthy and happy retirement’ plan announced by the government in March this year also had an impact.
In this measure, the government decided to reintroduce sales-type senior welfare housing, which was abolished in 2015, to 89 population-decreasing areas across the country and implement it starting next year. Among the eligibility requirements for senior housing, it was decided to abolish ‘those who can live independently’ and allow people over 60 years of age to do so.
In addition, it was decided to include organizations such as REITs (real estate investment companies), long-term care institutions, hotels and restaurant companies, and insurance companies among the organizations that can entrust the operation of senior housing. If you move into Silver Town, it is recognized as an exception to actual residence, so you can continue to receive housing pension.
Silver Town’s demand base has expanded, and the way to greatly diversify supply methods has been opened. Construction companies are focusing on high-end silver homes targeting high-income senior citizens and are selling related facilities.
The company that is taking the fastest steps is Lotte Engineering & Construction. The company successively supplied ‘VL Le West’, a residence for high-income (assets) senior citizens, to the Magok MICE complex in Gangseo-gu, Seoul, and ‘The Classic 500’, a premium silver town in Neungdong, Gwangjin-gu, Seoul.
Daewoo E&C decided to expand its senior business with a new business this year. Recently, we introduced ‘Baekun Lake Prugio Forest Morning Suite’ with MDM Group, a leading real estate developer in Korea. It is a hotel-style silver town located in Baekun Valley, Uiwang, Uiwang-si, Gyeonggi-do.
Hyundai Engineering & Construction is promoting the ‘Eunpyeong Pyeonik 5 Senior Residence Complex Development Project’ with IGIS Asset Management, a real estate alternative investment management company. This is a project to develop a complex facility including senior housing in the Jingwan-dong area of Eunpyeong-gu, Seoul.
Hanmi Global D&I, a real estate development subsidiary of Hanmi Global, is preparing to sell the senior residence ‘Wirye Symphonia’. Wirye Symphonia, which will be built with 115 units in Jangji-dong, Songpa-gu, Seoul, is scheduled to be completed by the end of this year and be operational by March next year.
● Local governments and universities also prepare for the silver town project
Local governments and universities outside the metropolitan area are also showing great interest in the Silver Town project. In particular, local governments facing the risk of population extinction due to low birth rate and aging population are active.
Goesan-gun, North Chungcheong Province, is planning to create ‘Seongsan Starlight Village’ on a 34,866㎡ site in Yulwon-ri, Chilseong-myeon, with the goal of completion in 2026. Geochang-gun, Gyeongsangnam-do is preparing ‘Knowledge-In (IN) Geochang Arori Town’ in Jeongjang-ri, Geochang-eup, with the goal of completion in 2027. The two projects are part of the ‘Local Vitality Town’ contest project that the government has been promoting starting this year with the purpose of supporting the settlement of retirees, farmers, and young people returning to rural areas.
The city of Seoul signed a business agreement with Gangwon-do in November last year and decided to build ‘Gold City’, a Seoul-provincial coexistence housing policy model, on an area of 300,000 m2 in Samcheok-si, Gangwon-do. The plan is to create a silver town-type new city with 2,000 to 3,000 houses where retired Seoul citizens can reside. Construction will be undertaken by Seoul Housing and Communities Corporation (SH) and Gangwon Development Corporation, and the goal is for occupancy between 2028 and 2030.
Universities outside the metropolitan area are also busy preparing for the project. On the 7th of last month, Gwangju Chosun University and Busan Dongmyeong University signed a business agreement with Daeryuk Aju Law Firm to build a silver town incorporating education and medical systems on the school site.
Dongmyung University plans to build a silver town with about 600 units around the main gate to allow retirees to freely enter the university and utilize campus facilities smoothly. Chosun University is considering a plan to build about 700 units near Chosun University Hospital. If both projects are implemented, it will be the first time a university builds a silver town on campus.
● Government-led silver town pilot project also begins in earnest
The silver town pilot project promoted at the central government level is also gaining speed. A representative example is the pilot project using ‘Healthcare REITs’ conducted by the Ministry of Land, Infrastructure and Transport through Korea Land and Housing Corporation (LH).
Korea’s first senior housing (2,550 units), mid- to large-sized officetel (874 rooms), nursing facility (80 rooms), oriental medicine hospital (120 beds), cultural facilities, and commercial facilities on a medical facility site (approximately 186,000 m2) in Dongtan District 2, Hwaseong-si, Gyeonggi-do. This is a project to create a residential complex with facilities.
On the 20th of last month, LH selected MDM Plus as the preferred business negotiation partner. We plan to sign a business agreement in June. Afterwards, once the operator receives healthcare REIT establishment and business approval, a business site sales contract is scheduled to be signed at the end of this year.
Kim Hye-jin, deputy manager of LH’s real estate finance business department, said, “If the discussions with MDM Plus are completed smoothly, the necessary licensing procedures for construction will begin sometime next year, construction will begin in the first half of 2026, and completion and occupancy will be possible in 2029.” She continued, “The Health REITs company that will be established to promote the business will pursue a general public offering and listing in 2031.” If all goes as planned, it will become Korea’s first healthcare REIT.
The Ministry of Land, Infrastructure and Transport and LH plan to expand the Silver Town project in the future. Kim Jae-kyung, head of LH’s Regional Balance Headquarters, said, “Our country will become a super-aging society next year, but housing for senior citizens is only around 2%.” He added, “In line with the government’s policy to expand senior housing, land owned by LH, including the 2nd and 3rd new cities in the metropolitan area and metropolitan cities, will be expanded. “We will continue to pursue follow-up projects,” he said.
● There are few mountains to climb
As the aging population progresses, the demand for silver town projects is likely to grow rapidly. The problem is that there are quite a few prerequisites to ensure adequate supply. This is why the business community, including the Korea Chamber of Commerce and Industry, is raising its voice for easing related regulations.
In the ‘2024 Killer and People’s Livelihood Regulation Improvement Tasks’ proposal submitted to the government on the 22nd of last month, the Korea Chamber of Commerce and Industry requested ‘expansion of health management services in senior welfare homes’ as one of 100 regulatory improvement tasks. The demand for senior welfare housing such as Silver Town is increasing, but the unavailability of basic medical services, including treatment, is becoming an obstacle to the revitalization of senior welfare housing.
The Korean Chamber of Commerce and Industry urged the establishment of standards for the deployment and operation of medical personnel in senior welfare homes and the allowance of basic-level medical services. Considering the characteristics of senior welfare homes that require 24-hour management of the health of elderly residents, the key is to request that related laws be revised to enable basic treatment and health guidance at least at the level of school health rooms or workplace infirmaries.
There are many other mountains to overcome. Above all, the problem is that the Silver Town, which construction companies are currently putting a lot of effort into, is focusing on luxury competition targeting only the elderly with high net worth. As a result, the burden on Silver Town residents is excessively high. In fact, it is known that the average amount borne by residents of Silver Town in Seoul is 200 million to 1 billion won in deposit and 1 to 5 million won per month in living expenses. Measures are also needed to address concerns about poor management, fraudulent sales, exaggerated advertising, and concerns that it could become a means of speculation, which were raised when the sales-type silver town became active in the 2010s. The government has also begun to prepare complementary measures, including mandating the writing of standard contracts.
Reporter Hwang Jae-seong jsonhng@donga.com
2024-05-04 01:59:04