EXPO REAL: No let-up in demand for senior housing across Europe

The senior housing and healthcare sector has proved its resilience and its potential during the pandemic, leading to increased demand and interest, experts agreed at Real Asset Media’s SHHA briefing at Expo Real last week.

“I’m very excited about the sector. Appetite did not diminish during the pandemic, because it is driven by macro factors,” said Stephen Miles, executive director, head of operational real estate investment continental Europe, CBRE. “Investor volumes have held up better than other asset classes and there is no let-up in demand. The real problem now is supply.”

Provision remains low across Europe. In the UK, senior living accounts for less than 4% of housing stock.

“We need a lot more product in senior housing and in healthcare,” said Nikolai Schmidt, managing director transaction healthcare, Swiss Life Asset Managers. “Now there is an incentive to build new facilities because investors are interested, they have seen how resilient this asset class has been during Covid-19.”

The entrance of new players is expected to give a boost to the sector, lead to more investment in real estate development and go some way towards reducing the current supply/demand imbalance.

“Investors have realised that these facilities are critical and the market is large, so they are diversifying from offices or retail into the sector,” said Frédéric Dib, president, Mozaic Asset Management. “There’s clearly a lot of growth ahead for the sector to meet what is a real need in society.”

Demographics is the key driver

On the demand side, demographics is the key driver as the baby-boom generation will soon join the ranks of over-65s. By 2050 the number of people over 85 will have doubled.

The different aspects of hospitality are expected to grow in importance as senior housing becomes more of a residential product. Miles called it “the hotelification process”, as more amenities and more services are on offer to meet residents’ demands.

“There is such a high demand for healthcare that new products are being developed,” said Sabine Geuss, senior fund manager, healthcare, Principal Real Estate Europe. “We’ll have more diversified care facilities. On one side there’ll be activities for people, a chance to have coffee together, socialise and be part of the community, while on the other there will be medical centres and specialised clinics.”

The mixed-use trend in real estate extends into senior housing and healthcare to offer more flexibility to residents and investors alike.

“We see a shift to assisted living where residents can choose their accommodation, their meals, their services and amenities,” said Schmidt. “They want to stay in one place, so if their health deteriorates they can remain in the building and receive more assistance.”

There will be more choice across the spectrum of needs. “We hope to be supported by local regulations so we can create the new products the market demands,” said Geuss.

Author: Nicol Dynes, Real Asset Insights