Korean Senior Startup Companies Turned Into Real Estate Business called 'Silver Town'

Korean Senior Startup Companies Turned Into Real Estate Business called 'Silver Town'

 

 

 

 

Senior care startups, which raised expectations for care innovation under the banner of introducing IT technology and improving service quality in long term care, are increasing the proportion of senior housing businesses.

 

It is an expansion of its business portfolio beyond visiting care to the silver town business, and it is pointed out that existing IT is only an additional factor and has actually shifted to a real estate business model.

Caring announced on the 27th that it has signed a business agreement with Koramco Asset Trust to develop a senior housing business model. 

 

 

 

The company explained that it will focus on analyzing the location of the domestic silver town and nursing home market and developing and operating differentiated senior-specific spaces as a joint project plan in the future.

Koramco Asset Trust is a real estate management company that is in charge of real estate-related tasks such as REITs establishment, asset management, real estate development, investment advisory, and real estate trust. Currently, there are 50 REITs in operation. With this, Caring laid the foundation for expansion of healthcare-based senior residential facilities following the first store of Caring Stay, an urban paid nursing facility, on March 18 and reduced its dependence on low-profit long-term care projects.

Although Caring has been steadily increasing its sales, it still remains in the red. Despite sales of KRW 34 billion in 2022 and KRW 55.5 billion in 2023, following KRW 11.3 billion in 2021, the deficit is widening to KRW -2.2 billion → -6.6 billion → -6.9 billion in operating profit. "Caring is in the process of raising funds for follow-up investments," an industry source said.

In September last year, CareDoc co-launched "Care Operation," a senior housing operator, based on the investment of global asset manager Invesco. It plans to supply senior residential facilities with 4,000 households to the Seoul metropolitan area by 2027. In addition, it will promote convenience for tenants by introducing a smart home solution (S-PMS) that applies artificial intelligence in senior housing.

Some people say senior care start-ups are falling into real estate investment companies. "We are in a hurry to grow our company size. To expand the scale, education and service quality improvement for nursing care workers have been put down to the lower ranks," an industry source said. "We aim to increase land and asset prices, or seek profitability centered on distribution margins generated by home appliances and furniture that are needed when moving in."

Due to the low margin, it is difficult to recover high profits in a short period of time. Due to these characteristics, it is inevitable that senior care start-ups are likely to burn out large-scale investments by aggressively acquiring long-term care institutions. This is why there is an analysis that the service that combines IT services with senior housing is not the core, but rather the focus of the building rental and distribution model, which secures stable monthly income.