Sam-il PwC "Lack of Housing Facilities for Middle-Class Seniors... Private Sector Participation Urgently Needed"

Analysis and Strategy of Korea's Senior Residence Market
"Korean-Style Senior Housing Model Needed"

As South Korea enters a super-aged society, interest in the domestic senior business is growing, and opinions have emerged that private sector participation and government support are necessary to expand this market.

On the 9th, Samil PwC announced the publication of a report titled "Wise Senior Residential Life - Focusing on the Senior Residence Market." This report was prepared to analyze the current status of the domestic senior residence market, present overseas cases, and provide strategic directions for the domestic senior residence market.

The report emphasized that the senior residence market is a largely untapped field with significant growth potential. As the number of elderly people who do not wish to live with their children increases, demand for senior residences is expected to rise, but supply is severely lacking compared to demand. The report pointed out, "Currently, the domestic senior residence market is polarized between low-income/vulnerable groups and the wealthy, with no residential facilities to absorb the demand of the general middle-class seniors, who account for over 97%." In a broad sense, the supply scale of senior housing, including nursing facilities, accounts for 2.7% of the total elderly population (as of 2024), while the supply in the residential sector excluding nursing facilities is only about 0.23%. If these are expanded to 1% and 3%, respectively, it is expected to increase by 4.3 times and 12.8 times compared to the current supply.

In contrast, Japan and the United States have established senior housing-related elderly welfare measures since the 1960s. In Japan, starting in the 1960s and with the revision of the Long-Term Care Insurance Act in 2000, the senior business grew rapidly, and in 2011, service-type senior housing called "Sakoju" was officially introduced, leading to active private sector supply. Other successful senior housing models include Continuing Caring Retirement Communities (CCRC) centered in the U.S., University Based Retirement Communities (UBRC), and intergenerational coexistence housing models in Singapore.

The report advised, "While benchmarking overseas models, it is necessary to develop a Korean-style senior housing model that actively reflects the trend of 'aging in place'?wanting to spend old age in one's current residence?and age tech advancements."

Meanwhile, the government announced senior residence activation policies last year, including the introduction of Silver Stay (private rental housing for middle-class elderly households), deregulation of private sector entry into senior residences, and support for private financing. The report stated, "Relying solely on the public sector for the severely insufficient senior residence market has its limits," and advised, "Various types of residential facilities and services that can meet the general senior demand should be provided through private participation, and government support is necessary for this."

Lee Sang-min, head of the Finance and Real Estate Group at Samil PwC, said, "While deregulation of entry into senior residences is positive, more active support measures such as tax benefits and subsidies for private participants are needed," and suggested, "Deregulation of entry into nursing services should also be implemented so that housing and nursing services for seniors can be linked."