Korean major retailers tap senior residence market

VL LEWEST 79A [Courtesy of Lotte Hotel]

South Korea’s retail giants are rapidly venturing into the senior residences business, with Lotte Group subsidiary Lotte Hotel taking the lead by introducing the industry’s first senior residences brand, “VL (Vitality & Liberty).” In response, Shinsegae also identified senior residences as a new growth area for the next decade.

According to industry sources on Sunday, Lotte Hotel, which launched the senior residences brand VL in 2022, is actively preparing for the commissioned operation of “VL lhour” in Busan and “VL LEWEST” in Gangseo-gu, Seoul. VL lhour is expected to be the first senior residence in South Korea to be operated by a luxury hotel, with VL lhour and VL LEWEST’s opening scheduled for the second half of 2024 and 2025 respectively.

Senior residences are complex residential facilities that offer commercial, medical, and leisure services. What sets VL Senior Residences apart is the incorporation of Lotte Hotel’s 50 years of hospitality expertise, providing residents with a level of service akin to a 5-star hotel. According to Lotte, services such as 24-hour concierge, in-home cleaning and maintenance, and chauffeur-driven rental car services will be available at the facilities.

Lotte Group’s capabilities in healthcare services will also be harnessed for health management services, with VL LEWEST to have a 24-hour operating health center affiliated with Lotte Medical Foundation’s Bobath Memorial Hospital and external connections to tertiary hospitals also supporting medical services. Lotte Healthcare will collaborate with VL to develop a senior care platform, allowing residents to monitor their health and receive personalized dietary plans. Pet-friendly accommodations will also be available, a feature not commonly found in traditional residences.

Following in Lotte’s footsteps, Shinsegae is looking to tap senior residences as a promising growth driver. Josun Hotels & Resorts closed document submissions for recruiting personnel to plan senior residence services on January 31st, 2024. The hotel is seeking experienced individuals to design senior residential products and evaluate senior real estate’s business feasibility.

Shinsegae Property, the affiliate that manages Starfield, already announced its plans for senior residences as a future focus during its 10th-anniversary ceremony in December 2023. The company envisions developing high-quality senior residences that go beyond nursing facilities, integrating core assets such as department stores, markets, Starfield, and convenience stores into residential facilities.

Major retailers are aiming to tap urban senior residences due to the increasing scarcity of elderly housing facilities. As a substantial portion of the baby boomer generation with considerable economic clout transitions into senior living, the supply of residential facilities is critically insufficient. Korea is expected to enter a super-aged society with a senior population exceeding 20 percent by 2025, but there are only 39 senior towns (paid senior welfare homes) nationwide as of 2022 according to the Ministry of Health and Welfare. This number has remained stagnant with little to no change since 2018.