Why the Chinese Cemetery Industry Is Booming

With an aging population and extremely limited urban space, one company is even planning a huge IPO. 
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Worshippers clean the graves of their ancestors at a cemetery during Chung Yeung festival in Hong Kong. (Kin Cheung/Reuters)

As plum real estate in China grows scarce and prices soar, it isn’t just luxury condo buyers who are paying out the nose to secure a plot of soil.

Shrinking land supply and booming demand are driving a boom in China’s burial business. In Shanghai, for instance, a plot of land near its downtown sold for $3.5 billion in early September—about 37,300 RMB per square meter. Meanwhile, China’s population is aging fast; its 119 million citizens aged 65 and over as of 2010 will more than double by 2050. 

No wonder Fu Shou Yuan Group, a Shanghai company that runs cemeteries in a slew of major Chinese cities, is planning a $200 million IPO in Hong Kong, as FastFT reports, with Citi underwriting the listing. Private equity powerhouse theCarlyle Group is one of its big shareholders, The Standard reports.

There are a number of reasons why Fu Shou Yuan might need the capital. The obvious one is land. With around 9.3 million people dying each year, and urban space growing scarce, China is set to run out of graveyard space in six years, as the Taiwan newspaper Want China Times reports. However, it’s not clear whether current regulations allow more land to be used for graveyards, in which case FSY will be investing in landscapers, stone masons and other crafters of fancy grave sites.

Demand is already strong. China’s annual spending on funerals exceeds 100 billion yuan, says the ministry of civil affairs. China has only 3,000 cemeteries; the US, by comparison, has 50,000, reports the South China Morning Post.

That’s driven the prices of graveyard plots sky-high. For instance, a plot in Shanghai is typically between 80,000 and 100,000 RMB, though plots can go as high as 200,000 RMB ($32,700). And that’s not counting the prices of the gravestone or any other landscaping. Prices in a Guangzhou cemetery have gone up 10 percent each year over the past decade, as one cemetery sales representative told the People’s Daily. One Guangdong province official was busted for having sold outsiders 8,000 plots earmarked for local residents, bringing in $48 million in illegal profits, Want China Times notes.

The Chinese government has even started subsidizing sea burials to compensate, paying Shanghai residents 2,000 RMB each to scatter ashes over Hangzhou Bay. For the past few years, some city governments have also pushed so-called tree burials, in which a person’s ashes are placed in a biodegradable casket and interred next to a tree. But cultural pressures tied up in Confucianism and conspicuous consumption keep Chinese families demanding traditional burials in prominent plots.

A boom in old people and demand for real estate are boosting funeral businesses around the world. In Japan, for instance, the market was worth $18 billion as of 2009. High demand for real estate helps too, of course. The U.S. has four publicly traded “death care” companies, though most focus on the funeral home side of the business. One exception is StoneMor Partners, which owns and operates 274 cemeteries in the U.S. and Puerto Rico and listed in 2004. With a market cap of $513 million, it counts its edge in the costly and tight real estate market as a competitive strength.

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Gwynn Guilford is a reporter and editor for Quartz.

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