It will be built in the Shanghai International Medical Zone in Nanhui, a southwestern suburb of the city that aims to become an Asian medical centre by 2015.

'Shanghai has the oldest population in China,' Mr Zhou said. 'Our target market is rich Chinese in Shanghai and surrounding areas.'

The units will range in size from 30 square metres to 100 sq m, although Mr Zhou said prices had not yet been fixed.

In Germany, Augustinum charges Euro53 ($526) per square metre and provides meals, cleaning, a swimming pool, medical care, laundry and cultural events.

Shanghai has 2.6 million people over the age of 60 and only 474 retirement homes with 49,529 beds, catering for less than 2 per cent of the elderly population.

Overseas Chinese who wish to retire on the mainland are another target market.

In April, Tongji University, Siemens Project Venture and Asklepios Kliniken, a major private hospital operator in Europe, signed a memorandum of understanding to build a joint venture Sino-German Friendship Hospital in the Nanhui medical zone.

It will involve an investment of 1.5 billion yuan, with a construction area of 84,000 sq m and 1,000 beds, providing a wide range of health care. The first phase, with 500 beds, 21 outpatient centres and four medical technology centres, is to be finished by the end of 2008.

Of the staff, about 30 per cent will be recruited from overseas and the Chinese doctors and nurses will have the chance to study in Germany for one or two years.

This hospital will mainly target the 60,000 foreigners working and studying in Shanghai, as well as the tens of thousands of others who visit the city each year.

The hospital will be included in the medical insurance system of Germany and other European Union countries, an important consideration for EU citizens seeking medical treatment in China.

Grey market

Shanghai's retirement homes sufficient for just 2pc of elderly

Partners hope project will attract ageing overseas Chinese

University, partners to build 1,000-bed hospital in Nanhui