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Bird's eye perspective view of Lotte's senior housing community, Osiria, to be constructed in Busan South Korea's Lotte Group will build a luxury residential town for retirees in Seoul by 2025 to jump into the senior housing market in full force.Lotte Hotels and Resorts Co. will be at the forefront of the parent group's push into the elderly care market, which is in its early stages in South Korea, one of the world's rapidly aging countries.Lotte is set to become the country's first conglomerate to make group-wide efforts to enter the senior housing market. It hopes to enjoy a first-mover advantage in the unfledged market, estimated at 150 trillion won ($124 billion) in 2020.Moreover, it plans to utilize data accumulated from senior services for other new businesses related to the Internet of things and metaverse digital space.The Seoul Metropolitan Government is now reviewing the architectural design of Lotte's premium senior housing development, according to the municipal and construction industry sources on March 20."We are modifying our design in accordance with the review committee's advice to further expand the indoor space for residents," a Lotte official said. "There is no change to our schedule to complete the construction by July 2025."Once constructed, the senior community will have 782 housing units in Magok, western Seoul, which houses the Magok Industrial Complex for high-tech R&D and eco-friendly industries.It will be Lotte's second senior housing town. In Busan, the group will complete senior housing units within the Osiria Tourist Complex in Gijang-gun by 2024.Lotte is planning to expand its senior housing business into the areas surrounding Seoul.IN EXPANSIONARY MODELotte Group Chairman Shin Dong-bin, a Korean-Japanese businessman, picked senior care services as one of the few areas where Lotte can outperform rivals. It will mobilize its units from shopping to food and technology companies to support Lotte Hotels' entrance into the elderly services market.Except for Lotte, Samsung Life Insurance's public welfare foundation runs a premium senior community in Youngin near Seoul. South Korea's senior care service market takes just a 0.63% share of the country's gross domestic product, far below 2.37% in Japan. In particular, the senior housing market is in its very early stages in South Korea. Between 2011 and 2020, the percentage of the population aged 65 or over in South Korea had increased by 4.2% on average per year, at a faster pace than Japan's 2.1% during the same period.Globally, the silver economy is estimated at $15 trillion as of 2020 by Bank of America.Since last year, Lotte has been in an expansionary mode. It acquired a controlling stake in the furniture and home furnishing brand Hanssem and a convenience store chain Ministop Korea, as well as a stake in Canada's edible insect food maker.Last Friday, Lotte Rental, a car rental company, said it is entering the local business-to-consumer used car market in the second half of this year, after the government lifted restrictions on large business groups' entrance into the market.Lotte is also aiming to take the top spot in the metaverse retail space to overtake its rivals, which already got the jump on Lotte in the rapidly-growing e-commerce sector.CATCHING UPNow Lotte is trying to catch up with its domestic rivals such as Samsung, LG and SK, which had established their positions in new areas such as biotech, electric vehicle batteries and semiconductor chips, respectively.Between 2015 and 2020, Lotte had grappled with internal issues such as a brotherly feud over the management succession between Chairman Shin Dong-bin and his elder brother Shin Dong-joo. It also suffered from China's ban on the imports of South Korean products in retaliation for Seoul's decision to deploy a missile shield system known as Terminal High Altitude Area Defense (THAAD) in South Korea.TREASURE TROVE OF DATALotte's total capital expenditures decreased to 4.6 trillion won in 2020, versus 5.9 trillion won in 2018. During the period, its new investments shrank to 1.7 trillion won from 2.8 trillion won.The share price of Lotte Corp., the group's holding company, plunged to 31,100 won as of Friday's market close, compared with around 100,000 won in January 2016. In 2022, Lotte Group plans to spend a total of 7.7 trillion won on facility investments, up 22% on-year, according to the group.Lotte expects its elderly services will become its treasure trove of data on senior citizens' health problems and lifestyles, based on which it will provide customized services and expand into other retail businesses.Residents of Lotte's senior housing units should pay an upfront deposit of 900 million won and a monthly rent between 3 million won and 5 million won, higher than the monthly rent payment for the country's three other premium senior residences.To its residents, Lotte will provide differentiated services such as lectures on culture and arts in collaboration with Lotte Foundation for Arts and tourism services in conjunction with Lotte Tour Development Co., as well as social donation programs led by Lotte Foundation.In cooperation with Lotte Hotels ad Lotte Food, they will serve personalized diets, including meal kits for those with high blood pressure.In December 2021, Lotte appointed Ahn Se-jin, a former A.T. Kearney consultant, as CEO of Lotte Hotels and Resorts. Ahn had served as executives of both LG Group and LS Group.By Dong-Hui Parkdonghuip@hankyung.comYeonhee Kim edited this article
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