Czech Republic – Assisted living developers see gold as first wave of entrepreneurs retires
Post-revolution entrepreneurs, who were in their late 30s when communism ended in 1989, are now in their late 50s. It is a small wonder therefore that businesses such as private providers of high-quality assisted living are lining up to capitalize on the wealth stashed away by the generation during the first two decades of modern-day Czech capitalism.
The Czech Republic now has one of the oldest populations in the world. Estimating just how much financial capital is held by the country’s growing number of elderly citizens is a difficult task, but real estate entities certainly have their eye fixed on two potential pots of gold””the entrepreneurs who made good in their middle age across the past two decades and aging emigrants who, having built up substantial savings or fortunes abroad, returned to take part in the homeland’s transformation.
Estimates given by the Ministry for Regional Development (MMR) show the proportion of people more than 60 years old will hit 40 percent in 2050 from the 27 percent it stands at now. The ministry’s figures also underline how the country has a greater proportion of seniors living without partners than any other nation in the world. By 2001, in terms of seniors, 60 percent of women and 23 percent of men were living alone.
Businesses scanning the statistical mix for a growing number of excellent sale opportunities in the market of elderly citizens may also note that while there are approximately 2 million people drawing pensions from the Social Security Administration (ÄŒSSZ) and other state entities in the Czech Republic, a mere 391 assisted living residential facilities for seniors have been registered nationwide by the Ministry of Labor and Social Affairs (MPSV). Investors interested in creating such real estate opportunities for the elderly might also note that while more than 37,000 people are said to live in these residences, hundreds remain on the waiting list.
Of the 391 care homes registered as providers of social services by the MPSV, 181 come under regional authorities, 146 come under municipal authorities and 48 come under churches. Only 15 are private, although Å tÄ›pán ÄŒernouÅ¡ek, a spokesman for the MPSV, said some private projects in operation might not be officially listed as offering social services.
Luxury segment emerging
Private assisted living projects for seniors are often geared to the middle to upper wealth brackets, but even a “luxury assisted living” market segment””something totally new to the Czech Republic””is emerging.
One company that for now remains concentrated on the middle to upper middle potential is Senior Park. It has drawn up a plan for the construction of up to 40 private housing projects in the Czech and Slovak republics for elderly retired people. Entrepreneur Jaroslav PlesnÃk said the firm hoped to build the projec, each with around 20 to 30 apartments, across the next five to seven years. The first Senior Park community should be established in LuÅ¡tÄ›nice, near Mladá Boleslav, Central Bohemia. It will serve as a pilot project.
“People who already own some kind of house and plan to lease it could easily pay for a Senior Park apartment,” said PlesnÃk, adding that the monthly cost of an apartment would comprise three elements””the rent, energy costs and charges for services such as nursing. Company Web site promotional material states the minimum monthly cost of a one-room apartment with a kitchen corner, excluding energy bills, will reach more than KÄ 9,000 (â‚¬326).
Apartments for seniors operated by regional and municipal authorities typically cost approximately KÄ 6,000—8,000 monthly.
Declining to discuss from where he had sourced finance for the LuÅ¡tÄ›nice community, PlesnÃk added that he would welcome the involvement of a strong investor for future projects. All the Senior Park communities are to be situated on a the periphery of a small town or village. A microbus will be used to take seniors to the location’s main shopping area.
The Acred Group is another company making headway in the high quality private assisted living sector. So far it has created the 62-apartment Residence Classis in the Prague suburb of PrÅ¯honice. Opened in October 2005, when it was promoted as the country’s first luxury housing complex for seniors, it has so far attained a 50 percent occupancy rate, said the firm. A Residence Classis resident must pay a minimum KÄ 39,000 in monthly rent and charges. “We would like to realize or just operate other similar residences for seniors. However, at the moment we are still in the phase of evaluation for suitable locations,” said Petra Caineová, development manager at the Acred Group.
Caineová added that Residence Classis was financed from private money as a long-term investment without any state contribution. The project must fulfill nonstate health care institution criteria, hygiene norms and operational rules, she said.
At least some cooperation with state administrative agencies must take place in the establishment of assisted living communities, said one business source who agreed to talk to CBW about his KÄ 100 million project anonymously. “It is impossible to get into such a project without the contribution of the regions and subsequently the [national] state [authorities],” he said, adding that his entity hopes to invest in 10 or more projects for seniors with 100 places each. When submitting a project that amounted to more than 10 apartments, he added, a certain percentage of the investment had to be presented as a “social project.” If this gesture was not made, he said, obstacles might be placed in the way of the luxury units. The apartments meeting the social criteria, meanwhile, could eventually be made part of a state program, meaning the state could use them to gain some European Union money designated for social purposes.
EU money out of reach?
But is it really possible to obtain EU structural fund finance for housing business initiatives aimed at seniors? According to Milan ZanÄ›na, a consultant at Euro Info Center, an organization that helps entrepreneurs access such finance, it is not. “The European funds are rather intended for young people and their integration into the job market,” said ZanÄ›na.
Others involved in EU funding agreed. “The preferred projects are those that somehow contribute to improving the job market, environmental or infrastructural situation. … These projects [for private assisted living] are commercial and in addition they are focused on the nonproductive side of the population, so therefore they do not fulfill the mentioned criteria,” said Jarmila BartuÅˆková, an MMR official who works on publicity and administration for the ministry’s National Strategic Referential Framework (NSRR) department.