One asset class has become increasingly popular in recent years. Investment in the different types of housing for the elderly in Spain and Europe has been growing steadily, in parallel with the health and social care sector, providing a stable ROI for investors.
As Spain ages, housing solutions for the elderly will continue to grow and will likely be a high-return, low-risk investment for years to come.
Today, there is an influx of private capital, much of it from abroad, which is speeding up the start-up of these new formats.
This is not surprising considering the yields offered by this model. After a slight compression in yields, prime residences in our country have an average yield of 4.5% - 4.7% and we expect them to remain in balance this year, offsetting the rise in interest rates with the impact of inflation on rents.
The reasons for the success of senior living
The senior living combines the best of the residences for the elderly, accessibility and relevant spaces for the preservation of their quality of life, with the autonomy of its inhabitants, achieving a life of coexistence and union among all those who live there.
This model implies a multi-fund and multi-operator investment opportunity, but also addresses the habitability needs of the population by building according to them.
By definition, they are multi-family dwellings suitable for the elderly, The aim of the project is to provide a lifestyle, a style of coexistence for the people who live there, with the objective of preserving their autonomy at all times.
To meet the demand of independent elderly people, the market offers different accommodation options in residential homes with à la carte services.
What are the types of senior living? We distinguish between four main types of senior living:
- Short-stay specialised centres, specialised in rehabilitation, for older people after illness or surgery.
- Independent living: communities for independent people who only need basic care or choose to live in communities with managed services. The profile of this modality includes people between 65-75 years of age.
- Assisted living: with more extensive services than the previous one and medicalised units. For independent seniors with more needs.
- Care homes: nursing homes for the elderly, for dependent elderly people and high medical care.
Favourable population dynamics
With an ageing population, senior housing is poised for further growth and is likely to be a high-return, low-risk investment for years to come.
Demographic patterns in Spain leave no doubt that demand in the sector will continue to be strong. In our country, in 1950 the percentage of people over 65 years of age was 8%, growing to 11% in 2010 and reaching 20% in 2022.
The ageing of the population ultimately means that the need for housing for the elderly will continue to increase.
Some numbers for analysis. The National Institute of Statistics (INE) indicates that 33% of the population is over 55 years of age and that in 2035 the over-55s will make up between 40 and 45% of the population. It is estimated that the population of the over-65s will continue to grow, reaching 30% in 2050, reaching over 16 million. In fact, these forecasts, as well as the fact that Spain is the fourth country in the ranking of highest life expectancy with an average of 83 years, have motivated the investor profile, with this segment accounting for 9% of the total investment in the living sector in our country.
The speed at which this segment of the population is growing, which is more pronounced in the coming years with projected annual growth of 2%, is the great endorsement for the investment opportunity in this living concept.
The potential of the sector is therefore remarkable. Senior Living implies an investment opportunity for multiple funds and operators, but also meets the habitability needs of the population, building according to them. The real estate sector must continue to work to adapt to the new needs of users and build a better future in the face of a clear union of social and economic interests.