Retirement destinations: South East Asia the hot spot

The Perfect Place

by Steve Mollman
Friday, April 6, 2007provided by

If there were a better place to spend their retirement years, Harold and Mary Richards would have found it.

The British retirees surveyed the globe, drawing upon their years of living outside the United Kingdom for his career in education. They considered overlooked spots such as Croatia and Bulgaria. They even gave promising contenders a chance, first trying out South Africa and then Spain.

Ultimately, they picked Phuket, an island on Thailand's west coast blessed with sunshine, tranquility and friendly people. The price of entry also worked in their favor: For about $500,000, they got a four-bedroom luxury villa with a private pool, courtyard and garden. They figure that's less than half what it would have cost in similar spots in most European countries.

"This is a palace," Mr. Richards declares, surveying his new home. "What more could a man want?"

The Richardses aren't the only retirees from abroad happily settling into Southeast Asia. More people from around the world are coming to the region, drawn by word of mouth, incentives from regional governments vying for retirement nest eggs, and affordable living, including housing and relatively inexpensive medical care.

"Retirees everywhere are taking a very close look at the relative quality and cost of living in deciding where to spend their retirement years," says Su-yen Wong, a managing director for Mercer Human Resource Consulting in Singapore. "Much of the Southeast Asian region scores particularly favorably in the analysis."

According to Mercer's 2006 cost-of-living study, Kuala Lumpur ranked 114th out of 144 cities, while Bangkok was 127th and Manila came in at number 141. By comparison, Seoul, Tokyo and Hong Kong ranked as the second, third, and fourth costliest places (behind Moscow), while London and New York were in the top 10. Sydney was the 19th most expensive city, Madrid ranked 53rd and Monterrey in Mexico was 103.

While the overall number of overseas retirees in Southeast Asia is still small, it's growing fast. Malaysia, for instance, started issuing retirement visas in 1996. By 1998, there were fewer than 50 holders of such visas. But by 2001, the total had grown to more than 800 and last year topped 8,700, excluding dependents. Malaysia aims to add 3,000 to 3,500 retirement visas annually over the next three years under its Malaysia My Second Home program, says Donald Lim, the country's deputy minister of tourism.

Thailand doesn't have an official retirement program in place, but the number of retirement visas is climbing there, too. In 2005, Thai officials say nearly 1,500 visas were granted to overseas retirees. The final tally isn't in yet for 2006, but they say it will show a big increase.

The Philippines, meanwhile, has revved up its recruiting efforts as a matter of national priority. The number of overseas retirees rose by 1,273 last year, more than double the previous year's total. The number of active retirement visa holders totaled 5,183 at the end of 2006, excluding dependents.

"We aim to have one million retirees here by 2015," says Ernesto M. Ordonez, president of Philippine Retirement Inc., a nonprofit organization that helps foster cooperation between private companies and the government's Philippine Retirement Authority, which processes visas for retirees.

With that ambitious goal -- and the competition -- in mind, the Philippines is making a systematic effort to attract retirees from abroad. In January it halved the size of the local bank deposit it requires retirees to make to prove their financial viability -- this after Thailand stopped requiring any deposit from retirees as long as they can demonstrate a monthly pension of about $2,000. The Philippines now requires a $10,000 deposit, which covers the retiree and any dependents, providing retirees can show a monthly pension of $800 for a single person or $1,000 for a couple.

The latest cut followed a previous halving of the deposit requirement, which is partly credited for a surge in the number of retirees in 2006, says Lory Morgia, the retirement authority's marketing chief.

The good news for these countries is that the pool of potential retirees keeps expanding. The retiree population -- defined as age 60 and above -- from the U.S., Europe, Japan, South Korea, Taiwan and mainland China totaled 326.6 million people in 2006, according to the Healthcare Coalition Institute, a California-based industry research group. That figure should reach 425.6 million by 2015, the institute predicts. In Japan alone, nearly seven million people are set to turn 60 and retire over the next three years, according to Japan's National Institute of Population and Social Security Research.

Indeed, says Liam Bailey, head of residential research at real-estate services company Knight Frank LLP in London, the biggest potential source of overseas retirees for Southeast Asia is Asians retiring near their home countries. Most Americans and Europeans, he notes, will naturally stick to areas closer to home, such as the Caribbean and southern Europe respectively. "They want to be able to get back to their home country easily. It's sort of convenience-led."

Likewise, Mr. Bailey says, most Asian retirees will prefer to stick to their region. "We haven't really begun to see the impact of, say, wealthy India and China money, and second-home purchases in Asia. It will become enormous," he says.

Already, Malaysia is benefiting from the growing middle class in China. Lai Shevren, a spokeswoman in Kuala Lumpur for the Malaysian retirement program, notes that the largest single group of retirement visa holders -- about 2,000 -- are mainland Chinese. She says one attraction is that many of them have relatives in Malaysia.

"If we could capture even less than 1% of (the global retiree) market, it would benefit our economy hugely," says the Philippines's Mr. Ordonez. "We believe that every retiree who comes will create four jobs -- such as maids, cooks, drivers, nurses and caregivers, barbers and hairdressers. If every retiree spends an average of $1,000 a month, we will bring in revenue of $1 billion a month as well as creating four million jobs." The strategy is partly aimed at helping reverse the country's troubling brain drain of skilled workers such as doctors and nurses, he adds.

(Australia is often viewed as a big regional retirement spot, but its immigration hurdles, including the financial requirements for a visa, are significantly higher than they are in Southeast Asia.)

Of course, the concept of retirement means different things to different people. And these days retirees come in an array of ages and family situations, from 60-something bachelors to 50-ish couples with school-age kids. Some want to resettle permanently in a location; others want to split their time between favored destinations.

Take Hong Kong businessman John Tam. He holds a retirement visa for Thailand, but the 58-year-old semi retired executive plans to live there only three or four months a year. He bought a villa on Phuket about two and half years ago with an eye toward retirement -- and investment. He and his wife Magdalena, 56, move between it and other homes they have in Shanghai (because of its liveliness), Beijing and Wuhan (for their culture and history), Bangkok (for the people and the food) and Hong Kong.

"I'm planning to split my time among several places," says Mr. Tam, who plans to leave his electronics-component distribution business when he turns 60. "I'm used to traveling a lot, so it would allow me to travel here and there, even in retirement."

Mr. Tam won't disclose his purchase price, but a realtor in Phuket says prices have climbed 30% annually over the past five years and she estimates the Tam home currently is worth about $2 million. (Parts of the island were damaged in the 2004 tsunami. But Mr. Tam says his villa is elevated and fronted by islands that act as a natural barrier; the neighborhood where the Richardses live was largely untouched.)

Billy and Marita Thomson, who recently purchased a retirement condo in the Philippines' Subic Bay area, site of a former U.S. naval base northwest of Manila, also plan to divide their time. They met there in the 1960s when Mr. Thomson, now 60, was a U.S. Marine. But, having lived in Alaska for the past 30 years, Mr. Thomson isn't about to give up his salmon fishing. So the couple plans to spend half the year in Alaska and half the year in the Philippines's warmer climate, where he enjoys swimming, snorkeling and scuba diving and she visits her family.

The Philippine government also is trying to lure back Filipinos who settled in the U.S. and are now reaching retirement age -- people like Pepito and Fina Raguini, aged 63 and 62 respectively, who grew up in the Philippines but have long lived in America where she worked as a nurse and he was in the U.S. Navy. Two years ago, they bought a two-bedroom unit at Subic Holiday Villas after a relative purchased one. Now they go there about twice a year for two or three months at a time and spend the rest of the year in their spacious home in Virginia Beach, Virginia.

"At least 50% of our condo sales" are to Filipinos living in the U.S., says John M. Reyna, assistant vice president for Robinsons Land Corp.'s leisure and retirement project. Starland Properties Inc., developer of Subic Holiday Villas, says that more than 80% of its buyers are Filipino Americans who divide their time between the two countries.

Others intend to make a more permanent move. Lee Hyeung Seock's physician in Seoul recommended he avoid the South Korean capital's polluted air because of a lung ailment. So Mr. Lee, 50, retired as an exporter of women's garments, applied for a Malaysian retirement visa and moved to Kuala Lumpur with his family last September. Being able to enroll his 10-year-old son in an American-style school is a bonus. "In Korea," Mr. Lee says, "there are only a few international schools."

For Kiyoshi Shiraiwa, 65, and his wife Yoko, 59, the bonus of retiring to Malaysia is golf. They pay about $425 each for annual membership at Kelab Golf Perkhidmatan Awam, a lush country club 10 minutes away by taxi from their Kuala Lumpur condo. They say that in Tokyo something equivalent would cost 10 times as much -- and be 90 minutes away. "We play golf twice a week," says Ms. Shiraiwa, looking as if she still can't believe it.

The couple rent their condo, which has a pool, tennis courts and gym, for about $575 a month; they estimate a similar set-up in Tokyo would cost more than $1,700. And the comforts of home -- including shops that cater to Japanese tastes -- aren't far away. "It's like a little Tokyo," beams Ms. Shiraiwa.

Jack Simon, a retired swimming coach from Florida, chose to settle on Penang, an island off Malaysia's northwest coast. The 68-year-old bachelor, who is fluent in Spanish, considered settling somewhere closer to home, such as Mexico, Ecuador, Uruguay or Chile. But he had attended a work conference in the region a few years back, and on a side trip to Penang was impressed by the island's food, friendliness, climate -- and low costs.

Mr. Simon describes Penang as "unbelievably inexpensive," noting he gets by mainly on his U.S. Social Security checks. He pays about $350 a month for a two-bedroom, two-bathroom condo that overlooks the Andaman Sea and is surrounded by tropical jungle. He plays golf frequently with friends, and dines out four or five times a week. A maid cleans for him once a week.

All told, Mr. Simon says he lives on less than $1,500 a month, adding that he could never enjoy his current lifestyle on the Florida coast spending the same amount.

Accessibility to good health care also influenced his decision to stay in Penang, Mr. Simon says. Not long after arriving, he had major spinal surgery at Island Hospital, a local private facility. That was followed by minor prostate surgery. "Medical care here is first rate," he says. Mr. Simon says he isn't insured, so he paid cash, and adds that the two procedures, including hospital stays and 24-hour home care, totaled less than $10,000. He figures his out-of-pocket expenses in the U.S., where much of the bill would have been covered by the government's Medicare program, would still have cost him two to three times more than he paid in Malaysia.

The low cost of living also drew Takeshi Yano, 63, and his wife, Junko, to Penang. "It's very, very hard to live in Japan with only a pension, so (retirees) are moving here," says the former cosmetics importer from Tokyo.

Mr. Yano, who says the couple didn't know anyone in Penang when they decided to move there, receives a monthly government pension of about $2,000 to $2,500, depending on the exchange rate. "I wanted to go to Europe or the U.S., but the basic idea is: Can we live with the pension or not?"

On Penang, he says, he manages by paying about $450 in monthly rent for a three-bedroom, sea-view apartment. Mr. Yano says he plays golf once a week and socializes with other Japanese retirees and expatriates, as well as Penang locals.

For some, though, the gain in lifestyle doesn't offset the loss of comfort zone. Mr. Yano says some of his acquaintances on Penang went back to Japan after a few months because they couldn't adjust. They didn't speak English -- almost everyone there does. They also didn't own a car, he says, plus Penang isn't pedestrian-friendly and doesn't have enough taxis -- and taxi drivers charge the Japanese more, he grouses.

Other things some people have difficulty adjusting to are the lack of seasons and the sometimes-oppressive heat and humidity. There's also, of course, the distance from family and friends. Security issues, too, are a major concern among overseas retirees.

Mikio Mori, 53, and his wife Etsuko, 42, considered resettling in the Philippines when Mr. Mori retired from a big Japanese oil company in Japan, but he says they worried about "no safety" in the Philippines, an image problem Philippine officials acknowledge but say doesn't reflect reality. Anticipating language difficulties in Thailand, the Moris opted for Kuala Lumpur, where they have a view of the Petronas Twin Towers from their high-rise apartment.

Then there's insurance. Because national healthcare coverage usually doesn't apply to a foreign retiree, medical expenses are out of pocket if the retiree isn't covered by private local insurance, which can be hard to obtain for anyone over 60.

Back in Thailand, the Richardses -- he is 81 and she is 79 -- are convinced they made the right decision. Married for 59 years, they spent all but five of those outside Britain. They are still settling into Phuket's lifestyle, having moved into their villa in November. But aside from minor annoyances, like having to renew his Thai retirement visa every 12 months, Mr. Richards says he has little to complain about.

"This seemed to be an ideal place to spend the rest of our lives," he says. "We settled here, and we have absolutely no regrets at all."

--Steve Mollman is an Asia-based writer. Ian Gill in Manila contributed to this article.

Write toSteve Mollman at steve.mollman@wsj.com