Silver cities

Planning for an ageing population

The looming impact of an ageing population

The world is ageing, particularly in advanced economies. Over the next 30 years, we will see an extra 15,000 people reaching retirement age in the Organisation of Economic Cooperation and Development (OECD) member countries every single day.

By 2045 the proportion of the population aged over 65 will rise to 25%, from the current 16%. This equates to 146m more old people than there are today – totalling 1.4bn globally.

At the same time, the younger population is steadily shrinking. In 2015, the young (those under 20 years old) counted for 24% of the population, a proportion which is expected to decrease to 21% by 2045.

This demographic shift is set to have a profound impact on society and the social fabric of cities. By 2030 all major urban centres in the OECD will see a sharp increase in the number of elderly. These cities will need to adapt and develop a number of short and longer-term strategies to ensure they respond adequately to both the challenges and opportunities that an ageing population present.

For the first time in history, the elderly will be the largest age group by 2045, with the greatest increase occurring in those aged over 75 years. There are two main reasons for this:

  1. A decline in the number of births. Fertility rates have declined steadily through the post-war period, particularly in advanced economies. Almost all OECD countries now have fertility rates below the replacement rate of 2.1 children per female.
  2. People are living longer. In the OECD, life expectancy for most people alive today is already 90-100 years.

This steady increase in longevity is having a noticeable influence on human behaviour, especially how and when people reach major milestones in life. In particular, there are three major observed changes:

  • Juvenescence: A new life stage is emerging between childhood and adult life. Young adults are enjoying an extended period of semi-autonomous living, often living at home with their parents until they are 30.
  • Longer working life: In the future, working life is likely to be extended until workers are 75-80 years old. Workers may need to confront multiple career changes and exiting the workforce is likely to be a more gradual transition.
  • Extended “third act” of life: Even as people work into their mid-70s, the expected period spent in retirement is likely to be between 20-30 years. This will encompass a more active period of spending and travel, but also an extended period of declining health for many.

Implications for an ageing population

Political and economic implications

Demographic change will have profound implications for the economy and economic growth is expected to slow permanently across most major economies. In turn, this will have a significant political impact. Specifically:

  • Stagnation of living standards. Rising living standards can only be sustained by higher productivity growth and unfortunately productivity is negatively correlated with ageing.
  • Low global interest rates. The rise in the number of older workers accumulating savings ahead of retirement has seen global savings swell, pushing real interest rates lower. At the same time, ageing populations have also contributed to the trend decline in investment, further depressing global interest rates.
  • Slow house price growth. Whilst the elderly sell at least part of their accumulated wealth once they enter retirement, they tend to retain their housing assets for much longer than other forms of wealth. Instead, there is an expected increase in demand for equity-release products.
  • Ageing will be negative for public debt. An ageing population will create significant fiscal stress for governments in OECD economies, as a result of rising health and pension costs.
  • Difficult political decisions will be needed to pay for ageing. Governments have to confront difficult decisions about who pays for ageing; either younger workers will be forced to carry a greater tax burden, or the elderly will need to fund a greater share of their own retirement costs.
  • Politics is becoming fractured along generational lines. The elderly are more politically engaged than younger generations and the evidence suggests that they increasingly have divergent fiscal priorities to younger generations.

Real estate implications

Retail sector: the rise of the Silver Consumer

The swelling number of retirees, combined with strong income and wealth levels, means the elderly consumer market is set to grow rapidly over the next 30 years. Because most elderly people are homeowners when they retire, their discretionary spending on non-housing consumer items is sustained well into retirement.

The expected growth in the elderly consumption market over the next 15 years presents a compelling opportunity for retailers who understand the elderly consumer. However, like other consumers, elderly buyers are also increasingly buying online. Industrial as well as retail stand to benefit from increased elderly online shopping. 

Office sector: The rise of the multi-generation workforce

By the start of the next decade there will be more older workers aged over 60 still in the workforce than young workers aged under-25. Older workers have different needs to younger workers and office design will need to adapt for their different spatial requirements in areas such as lighting, acoustics and ergonomics.

Residential sector: The changing needs of the last-time buyers

While demographic change will affect all real estate sectors, the impact on housing markets are perhaps most profound:

  • Elderly households will become a significant proportion of the residential market. By 2030, as many as a third of households in many OECD countries will include an elderly person. More than half of old-aged households will include someone aged over 75.
  • There will be a sharp rise in lone pensioner households. Already, one in five elderly people in the OECD live alone and this is usually a lone female household.
  • There is still little evidence of the elderly actively downsizing. The elderly tend to ‘age in place’, in locations where they have long-term community attachments. In England, only 2% of households aged over 65 have moved in the past seven years, compared to 51% of 16-24 year olds and 24% of 25-34 year olds.
  • Existing housing stock will need to be adapted. There is also likely to be significant opportunity in retrofitting existing houses to allow the elderly to live independently for longer.
  • There is an untapped potential market for quality age-friendly housing. There is a fundamental mismatch between the large, under-occupied houses that the elderly currently own and the mid-sized, accessible housing they actually need. There is clearly an untapped market opportunity to build the right product to unlock the potential downsizing (or “right-sizing”) by the elderly into purpose built dwellings that are better designed for their life-time needs and located in the communities where they have existing attachments. 

How an ageing population will change cities

By 2030 there will be a high proportion of elderly in over 30% of the OECD’s top 100 largest cities including Tokyo, Berlin, Milan, Madrid and Lisbon and these cities must adapt to accommodate them.

One area where ageing will have an impact is on what exactly is the right level of density in our cities. Policies to achieve greater density often boil down to attempts by developers to build ever-smaller-sized apartments, which are unlikely to be suitable for the changing physical needs of older residents (particularly the very old). However, increasing density must be balanced with age-friendly design principles to make downsizing more attractive for the elderly, possibly through incentives in the planning system.

Cities should also incorporate age-friendly principles to make the urban environment more appealing and suitable for older people. There is a growing need to make cities more accessible and responsive to the changing needs of the elderly. For example, many cities’ public transit networks are not fully accessible to the mobility impaired.

The following insights by some of Grosvenor’s developers around the world, look at the ageing issue from a city perspective, providing a snapshot of how the implications of an ageing population are being addressed, if at all, within four very different global cities – Hong Kong, London, Madrid and Vancouver. The pieces also offer views on how the sector can play a part in shaping the future development of cities in a way that improves their resilience to the ageing challenge.

A view from
Hong Kong

Improving the quality of homes for older people

Gary Wong, Senior Project Development Manager, Hong Kong

Hong Kong is one of the most densely populated cities in the world and has been ranked by Forbes as the world’s most expensive city to buy property in for the seventh year running. The pricing for a residential flat is now averaging between HK$16,000-20,000 per square foot. To make residential property more affordable, developers are increasingly focusing on the creation of small flats, primarily targeted at young, single buyers.

"27% of Hong Kong’s population will be elderly by 2030 and 33% by 2045"

The high cost of living in Hong Kong means that it is the norm for both parents to work, in turn relying on grandparents for childcare. This adds to the already strong cultural tradition of families staying close or together as a unit. In fact, unless the elderly require special care, it is not common for them to be encouraged to go to a care home. Showing filial respect for one’s parents is a virtue of Chinese people.

"In Hong Kong, unless the elderly require special care, it is not common to put them in a home"

The combination of cultural expectations and the high cost of housing mean that it is typical for a family of four or more to live together in an apartment unit of no more than 600 square feet.

"600 sq ft is a typical size home for a family of four or more to live together in"

But despite the obvious challenges facing Hong Kong, with its rising share of elderly people, limited space, and a culture of two-year lease lengths, there is sadly little awareness of the elderly issue among the public. There are few signs that the authorities are interested in the challenges either, instead focusing on wider issues such as economic competitiveness.

What could the authorities do? Since there is a respect for free trade and enterprise in Hong Kong the government is not minded to impose new conditions on private developments.

While the government already has planning rules for new developments aimed at setting minimum standards for the disabled, such as wheelchair access, these could be broadened out and extended to include senior citizens. For example, expanding the current limit on Buildable Floor Area that can be allocated towards recreational use from 5% by say two to three percentage points more, provided the developer commits to integrate a scheme or recreation space that caters to the needs and usage specifically for the elderly to help them remain active and integrated in their communities.

The government could specify a minimum size for apartments in schemes when they tender a land sale for development to ensure that the homes have the flexibility to accommodate multiple generations.

There could also be tax incentives, such as tailoring allowances for people living with their parents to be more generous to those families living in more crowded accommodation.

A good example of where a project has focused on this demographic is a suite of four projects developed by the Hong Kong Housing Society, a non-government and non-profit organisation, which built 1,224 units between 2003 and 2015. Three — Jolly Place, Cheerful Court, and Tanner Hill — are wholly for the elderly, while one, Harmony Place is built for a mix of buyers alongside their elderly parents and offers shared facilities such as a gym, swimming pool, and activity room. While these schemes have been very successful, delivering fewer than 1,300 units over 15 years is definitely not catching up with market demand.

"326,000 private homes will be 70 years old by 2045"

For private developers, the whole idea of adapting schemes for elderly living is still a work in progress. The sector could look to improve the quality of the offer by working with other sectors to ensure buildings can be adapted as residents age.

Developers should also be encouraged to develop products that focus on wellness, which have a positive impact on residents’ physical health, mental state and productivity. For example, its been shown that thoughtful material usage, colours, biophilia design, lightings and textures, are features that are increasingly important as one gets old.

There are also good opportunities to cooperate with technology and services providers to include improved telecommunications and internet facilities that senior citizens increasingly take advantage of and may come to rely on more in the future.

Constraints of space and pricing will mean the solution will come from adapting existing stock rather than building new properties. This means enhancing the living areas to include wider corridors, more spacious rooms, a more joyful atmosphere and more greenery as well as better public amenities to allow older people to remain within their communities.

Looking ahead Hong Kong will always have a high density. That is fine in itself, but in order to meet the challenge of an ageing population the government and developers must work together to ensure the existing stock is adaptable.

A view from London

Build-to-rent to ensure our global city remains home to older people

Simon Harding-Roots, Executive Director, Grosvenor Britain & Ireland

London is a young and fast-moving city but that does not mean it cannot be a city for older people.

Much of the negative language that is attached to the notion of the ageing population is both surprising and frustrating. People are not geriatric at the age of 60 or 70 and many will look forward to as many as 20 years of a really active lifestyle, taking advantage of transport, culture and leisure.

The ‘silver surfer’ generation is an exciting demographic and it means that what we have in London and in this sector is a huge opportunity, especially in a country that does not have a strong culture of keeping the elderly within the family unit.

We need to move away from the idea that the only option is for people to go into a care or rest home when, in fact, most older people in London, as much as elsewhere, wish to remain independent.

"37% increase in number of elderly (aged 65+) households by 2029"

The challenge is that many older Londoners are living alone in the family four-bedroomed home that they raised their children in, but which may not be suitable for an older person.

There is a strong opportunity for us as an industry to focus on building communities made up of homes for rent that will meet the needs of all demographics and not just the 25- to 35-year-olds whose faces often adorn modern development hoardings.

There is currently an acute lack of the type of accommodation in London that suits all ages. Developers need to capture those elements of a home that older people particularly value, whether that is spacious rooms, wider corridors, storage areas, or some outside space.

"£2.5 billion: the cost of poor quality housing to the National Health Service every year"

Including a range of different sized blocks and building with flexibility into a development so the units can be adapted later on is a very cost-efficient way of accommodating residents’ future needs.

Developers should also look to include more public amenities such as ground level open spaces within a proposed new community in order to make it more attractive to the older occupier.

Grosvenor hopes to put this into practice in Bermondsey, south-east London, where we have drawn up a masterplan for a mixed use community of 1,500 flats with office, retail and community space. Building for rent means the apartments will typically come with facilities and features such as two standard sized bedrooms and two bathrooms unlike much of London’s older stock where there will often be small ‘box’ rooms as part of the accommodation offer.

This takes into account that it is increasingly common for individuals of all ages to share homes, making living in London more affordable. New developments designed with this in mind are more appealing to people who fear being priced out of the capital. Technology installed within new buildings will also become an important feature for the increasingly tech-savvy older generation.

Renting should be seen as a functional way of life that offers flexibility where people might start off in a studio and work their way through the different types of property but within the same development, enabling people to remain in their chosen communities for longer. It can also provide a positive alternative to retrofitting large older houses, which are in demand from families.

"80% of elderly people wish to age in place"

Tax incentives could play an important role in encouraging older homeowners to sell an oversized family home and so free up housing stock, and for modern regeneration aimed at diverse and integrated communities. A financial incentive to sell, and an exemption from stamp duty when buying, could be very beneficial.

The good news is London has made significant strides to make the city more accessible, not just for the elderly but for everyone who needs help with mobility such as the disabled and parents with buggies. Whether it is way-finding signage, the Freedom Pass, pedestrian zones, dropped kerbs, supermarket deliveries and even taxis at the touch of an App, it makes for a friendlier city for everybody.

If we get this right, London will be a more integrated city. People will be living for longer in places they are happy in.

A view from Madrid

Designing new communities that accommodate the older person

Fátima Sáez del Cano, Managing Director, Spain, Grosvenor Europe

Every crisis brings an opportunity and in the case of Madrid the steep property crash of the last decade has opened a way for the city’s developers and authorities to pioneer a new approach to an age-old problem.

The downturn means that there has been little property development and low levels of public investment over the last 10 years. Now that confidence is returning, the needs of the elderly are back on the agenda and there is an opportunity to implement best practices and designs that have emerged over the past decade.

"The average life expectancy in Madrid is 84, making it the region with the highest life expectancy in Spain"

New concepts coming through include shared housing aimed at single women with children, who can support each other with childcare. This idea could be easily adapted to suit the elderly, overcoming the issue of loneliness and enabling people to share costs of living and social care without having to move to a care home.

New large-scale land developments in Madrid are now required to incorporate 25% social housing and this could be adapted to include an allocation for older people.

In terms of new properties, companies are starting to look at what will appeal to older people. They have to take account of the culture in Spain, which is very much family focused. Grandparents play a large role in helping take care of their grandchildren for example, which means that families want to live close to (but not with) each other. Therefore, there needs to be a variety of housing to enable people to move within their existing community.

"1.1 million elderly live in the inner city; over half the city’s population"

This means the concept of a retirement village that is prevalent in the United States will not attract much interest in Spain. Instead, the industry needs to focus on designing accommodation that is ready now but to which improvements can be made later.

We need a revolution that leads to the creation of better alternatives, which will in turn stimulate demand and lead to further innovation. There is a huge opportunity for an industry that is at a new starting point. The challenge is to produce something that is attractive to a 55-or 65 year old who may have few additional requirements, but which is flexible and can respond to their changing needs as they age.

This will include the flexibility to turn traditional layouts into open plan spaces and providing a main bedroom and bathroom that can still suit the needs of the elderly with mobility issues.

There is also a huge potential for developers to collaborate with services companies to install features that can help older people, such as incorporating technology that is very intuitive for the elderly to use and which adds greatly to their wellbeing.

The government too can help. Four out of five Spaniards own their home, but it is often their only financial asset, which means that they are often reluctant to sell in order to finance living in a retirement home, fearing they will leave nothing to their children when they pass away.

This will include the flexibility to turn traditional layouts into open plan spaces and providing a main bedroom and bathroom that can still suit the needs of the elderly with mobility issues.

There is also a huge potential for developers to collaborate with services companies to install features that can help older people, such as incorporating technology that is very intuitive for the elderly to use and which adds greatly to their wellbeing.

The government too can help. Four out of five Spaniards own their home, but it is often their only financial asset, which means that they are often reluctant to sell in order to finance living in a retirement home, fearing they will leave nothing to their children when they pass away.

"Three out of four elderly live in underoccupied buildings"

The cost of buying and selling homes, including a property transfer tax and notary and registration fees for the buyer and commissions and capital gains taxes for the seller, are high and could be reduced as an incentive to the elderly to move.

The key for developers is to educate the generation who are nearing retirement, helping them understand that there are options between their existing home and a care home. If this group trust developers to deliver high-quality homes that are flexible enough to adapt to their changing needs and at a price that is not just aimed at wealthier households, they are more likely to make the move.

The future may lie in the suburbs. Although many of Madrid’s elderly live in the city centre, its history and layout make it hard to find new sites or demolish existing buildings that often have no lifts.

The move of younger people to suburbs which are well connected to the centre by metro and where there is a supply of ready to develop land, offers the potential to build new neighbourhoods where multi-generations of families can more easily live closer for longer. That would be a positive legacy from the crisis.

A view from Vancouver

Densification key to ease shortage of homes for elderly to rent or buy

James Patillo, Managing Director, Development, Grosvenor Americas

Vancouver is a fast growing city but its ability to create sufficient housing to meet the demands of a growing population is generally constrained by lack of available land (surrounded by mountains to the North, an ocean to the West, the United States border to the South, and greenbelt and agricultural land to the East), long entitlement and permit timelines and public resistance. The result of this has been fast-rising property prices and an increasing affordability problem.

While this has led to a debate about housing supply, the primary focus of both the public and politicians has been on young people and families and how they will afford to live in the city. My concern is about a lack of attention on the other side of the demographic, the large increase in the ageing population.

"There are more people over the age of 65 than under 15 in Canada"

This constraint on space means densification within existing communities is required, especially as there is a strong desire among older people to remain in neighbourhoods where they have established their lives and social networks. There is overwhelming demand for new residential condominiums and it is not unusual for 100+ unit buildings to sell out in a weekend.

However, there is resistance to these types of developments particularly within the communities where we know there is the most demand for that product. The strong NIMBY (Not-In-My-Back-Yard) tendencies present in many municipalities means the very people who have reached or are reaching retirement are often the ones opposed to those plans.

"13% of downtown Vancouver residents are over 65 years old"

The challenge for the municipal councils and planning departments is to find solutions to bring more supply onto the market more quickly to meet the needs of people looking to downsize without putting further strain on existing civil and transportation infrastructure.

Grosvenor has designed a number of developments aimed at the downsizing market. Our 98-unit Grosvenor Ambleside development in West Vancouver is designed to meet the needs of the ageing community by including local serving retail outlets and an enhanced public realm.

The homes have largely been purchased by local older residents who want to remain in the community where their roots are, while being able to walk to local shops and restaurants.

"60% of ethnic minority seniors are Chinese"

Our Connaught development in North Vancouver features 82 homes over three or four storeys with over 60,000 square feet of ground floor retail including full service grocery and drug stores. We have received strong local interest, particularly from downsizers in the immediate vicinity was a notable feature in the appeal of this development. Our proposed downtown Vancouver condominium development, The Pacific, is also attracting interest from active downsizers who want to enjoy the vibrancy of the urban environment.

Another challenge will be to meet the demand from older people who have not built up equity in their homes to fund downsizing and who will require rental apartments in a tight market where the vacancy rate is below 1% regionally. There is a big problem emerging that will likely require government intervention, which could be as simple as rezoning areas for senior assisted living and care homes.

The challenge is for municipalities to encourage the construction of more accommodation for both sale and rent, marketed to older people while at the same time meeting demand from the younger generations. Creating balanced communities that serve diverse interests is how healthy societies survive.

Hopefully there will also be a change in the way developers look at senior living that produces more options between the current family home and a facility providing full care. People who are ageing nowadays are more active and want to be around like-minded people but do not want or need to go into a care facility.

The problem is that I do not see a lot of planning going on in municipalities for making specific zones or land parcels where the only approvable use is senior housing or a care facility. In the absence of deliberate zoning, land prices can escalate to a point where developing certain forms of housing for the ageing is not likely the highest and best use and therefore developers are not likely to do so.

One positive trend is the growing YIMBY (Yes-In-My-Back-Yard) movement among the younger generations who are aware that there is a need for more higher density housing to respond to the demand created by a growing population and changing demographics.

As developers and planners we have to figure out how to increase the supply while accepting that that process will change the city. That will be a big challenge but it’s what has to happen to address the needs of an ageing population.

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