Vietnam is on the cusp of a demographic shift, with 16.1 million citizens aged 60 and above, representing 16% of the population. By 2038, this figure is expected to climb to 20%, and further to 25% by 2050, according to projections. As the nation grapples with an aging populace, experts suggest a significant opportunity lies in elderly care—a sector ripe for investment within real estate and services.
However, the reality is stark: the availability of assisted living facilities in Vietnam is limited. Data from the Vietnam Association of Realtors (VARS) indicates that the country hosts only a few dozen such facilities, both public and private. These establishments primarily offer basic care, lacking crucial services like medical treatment, nutrition plans, and engaging communal activities. In Ho Chi Minh City, the numbers tell a familiar tale—just seven public and 13 private facilities operate, and while six of these offer free services funded by donations, the overall capacity remains constrained.
In light of these challenges, some major developers are stepping up to the plate, expressing interest in constructing and managing retirement homes. However, they must navigate hurdles including the need for expansive land, substantial long-term investment, and a workforce skilled in healthcare and social services. Notably, the profit margins in this sector are generally lower compared to conventional residential housing.
For instance, Vingroup is collaborating with Japan’s Well Group to develop a luxury retirement facility in Hanoi, while Sun Group has unveiled plans for the Sun Urban City project in Ha Nam Ward, which will integrate a hospital, senior living amenities, and community gathering spaces. Additionally, Tran Anh Group has earmarked over 20 hectares in Long An Province for a premium retirement home, and Novaland along with VinaLiving are advancing projects in Phan Thiet and Quy Nhon.
Yet, it’s not all smooth sailing. A local real estate developer highlights the significant barrier posed by the absence of a comprehensive legal framework guiding the development of retirement housing. Coupled with the reality of low elderly incomes in Vietnam—where the average monthly pension was around VND6.2 million (approximately US$230) at the end of last year—there are substantial obstacles to navigate. Basic elderly care in major cities starts at VND10 million ($380) monthly, with premium packages priced between VND16-22 million ($610-830).
The upward trend in expenses, which grow at 10-15% annually, starkly contrasts with a yearly increase in pensions limited to 5-7%. Unlike many developed countries, where insurance or government supports senior care costs, in Vietnam the responsibility largely falls on families. As VARS IRE pointedly states, “As long as costs are higher than incomes, demand alone will not be enough to encourage investment.”
Pham Thi Mien, deputy director of VARS IRE, emphasizes the need for stability in policies and regulations to alleviate investor concerns over cash flow and profitability. “Senior housing must be profitable to be sustainable; otherwise, it will encounter the same issues as social housing,” she warns.
Nguyen Van Dinh, vice chairman of VARS, reiterates this sentiment, stating that the lack of government support for retirement homes makes investors wary. He asserts that the aging population creates ripe opportunities for those willing to enter the market early. Experts advocate for government intervention through land provisions, credit facilities, tax incentives, and an improved legal framework for senior housing.
Proposals include launching adult daycare centers in populated areas, where seniors can spend their daytime under supervision. These centers would offer basic services, foster community interaction, and address both medical and emotional needs. At a recent conference, Party General Secretary To Lam noted that while adult daycare centers represent a fitting response to the needs of Vietnam’s aging demographic, progress has been sluggish. He encouraged greater involvement from the private sector, reminding attendees that many seniors are often left alone during the day while their families are occupied with work or school obligations.
What is the current percentage of Vietnam’s population aged 60 and above?
Currently, 16.1 million people, or 16% of Vietnam’s population, are aged 60 and older. This figure is projected to rise to 20% by 2038 and 25% by 2050.
What challenges do developers face when investing in elderly care facilities in Vietnam?
Developers contend with various hurdles, including the need for ample land, significant long-term investment, a skilled workforce in healthcare and social services, and a lack of a reliable legal framework.
How do costs of elderly care compare to available pensions in Vietnam?
Basic elderly care costs at least VND10 million ($380) monthly, while the average pension was just VND6.2 million ($230), creating a significant mismatch that discourages investment in the sector.
