Experts predict that the sharing economy will continue to proliferate in Russia this year. The new consumption culture has created numerous new formats for both residential and commercial real estate. The global market of co-living spaces grows 30% every year as one of the major trends of the sharing economy. Private geriatric centers are among the most popular co-living formats.
Like any other business area targeting older customers, geriatric centers will be increasingly in demand in the future. Russian population continues to age and, therefore, the number of seniors will only increase within the next ten years. Of course, the Western custom of aging parents moving into a care home is still odd for the traditional Russian mentality. It is more customary in our culture to value the ties between generations – especially because grandparents are actively involved in the family, often looking after their grandchildren and remaining economically active after retirement.
With the growing number of seniors, there will be a higher share of those for whom geriatric centers may be a solution to loneliness or a way to improve the quality of life despite serious ailments. The retirees’ mentality is changing as well. It will not be too long before former hipsters will become pensioners, changing the demand for co-living spaces for the elderly.
“Since the collective format of living has its needs, whether a specific facility can be economically viable depends on its well-conceived design and smart implementation. It is essential to know your target audience well, its potential interests and paying capacity. It is also important to create original communal spaces based on your audience’s pastime preferences,” comments Alexei Khomenok, CEO of G5 Architects. “Suburbs and residential neighborhoods further away from city centers, in quiet and environmentally clean areas are the best locations for such geriatric centers provided they have good transport accessibility to make it easy for families to visit their loved ones by public transport or by car.”
According to the Demography National Project reports, the number of existing geriatric centers is still below the current demand, lacking 10,000 to 15,000 places. Large-scale construction of public geriatric centers is planned as part of the national project by 2024. The Uphill Consulting Group estimates, based on the overview of facilities under construction in Moscow, that the facilities built under concessional contracts with the state are usually large technology-intensive medical centers for 100 plus beds. These facilities receive over RUR 400 mio ($4.8 mio) in investment, their cost-effectiveness only achievable with the government’s help.
Privately run centers with improved comfort and a quality geriatrics concept already exist on the market and will be in demand in the foreseeable future. However, budget facilities are still scarce. For example, Senior Group operates three geriatric homes near Moscow. The standard care program costs from RUR 5K ($60) per day, offering restaurant-level meals and plenty of other pleasant details. But the majority of seniors would not be able to afford it unless sponsored by their children. For residents with more severe conditions that require continuous specialized care, the daily rate may be RUR 23K ($276) and more. Cheaper geriatric centers, starting at RUR 800 ($9.6) per day for Moscow, offer a smaller scope of medical services, simpler meals and amenities.
“Looking at the European experience, we see a slightly different model, with smaller facilities for 10 to 12 people who expect to live there for many years. In Sweden, for example, the idea is that a high population will prevent residents from feeling truly at home. They build rather modest accommodations, usually in the countryside, with peaceful views and clean environment. It is more a home and less a medical facility. We estimate that building this kind of facilities would cost at least RUR 50 mio ($600K). Restructuring existing facilities should cost cheaper. Medical equipment (depending on the care home specialization) is an added cost, comments Lev Salts, Development Director at Uphill.
According to the G5 Architects bureau, the design cost a geriatric center that does not have special medical functions starts from RUR 3K per square meter, and from RUR 4K per square meter if it includes geriatric medical services.
“Such projects have to be implemented in accordance with the existing Russian design regulations, Geriatric Centers and Facilities. It outlines the peculiarities of design, the size of living area and room fittings, etc. For instance, the lobby must be spacious and filled with natural light, the ceilings must be at least 3,000 mm high, and the interior needs to be inviting and homey. Designers need to take into account the needs of elderly residents and not forget about functional beds and a nurse call button; the shower and bathroom must be accessible for people with limited mobility. As with any collective housing, it is necessary to focus on the organization of rooms and common areas,” Alexei Khomenok said.