Most often, a nursing home is a public or private property where the elderly can permanently reside and receive all the necessary daily services related to health, food, leisure, etc. In recent years, this type of real estate has been especially popular for investors around the world - both in Europe, America and Asia.
Reasons for the rise in popularity of nursing homes
The demand for nursing homes is growing along with the increase in life expectancy, which is often associated with an improvement in its quality. Demographers predict that demand among older people for nursing homes in selected developed European countries will grow by more than 60% over the next five years. Now countries where the proportion of the elderly population is about 20% are, first of all, Monaco, Japan, Switzerland, Germany and Great Britain.
The growth factor in the demand for this type of real estate is also influenced by the fact that families in many countries are small. When an only child grows up and creates his own family, then not everyone has the strength and capabilities (and sometimes, unfortunately, the desire) to ensure that an elderly and, most often, a weak person is always under supervision. Also, let's not forget that now a generation of baby boomers is retiring, who gave birth much more often during the period of economic growth in the post-war period.
Affects the growth in demand for nursing homes and the housing issue: in a megalopolis, where the cost of square meters is especially high, not everyone can afford to comfortably live together with a large family. It is also not uncommon for the elderly to remain completely alone and, with poor health, move to nursing homes to maintain a high-quality standard of living.
According to UN data, at the end of 2018, the number of those who passed the age limit of 65 years exceeded the number of those who were less than 5 years old. Current trends indicate that by 2050 this difference will be even greater - for every child under five, there will be more than two 65th birthday children. Thus, it is clear that the number of elderly people in the world will grow, and with it the demand for nursing homes.
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At the end of 2020, according to a study by The Wealth Report, the volume of private investment in commercial real estate in the world was 9% higher than the average for a decade. At the same time, $ 7.1 billion was invested in the segment of specialized real estate for the elderly, which occupies 3%. Among the European countries where this type of housing for the elderly is particularly well developed are the UK, Germany and France. In England, this sector of commercial real estate is also actively growing in connection with the popularization of a healthy lifestyle and the development of medicine. Interest in it is also stimulated by an increase in the level of well-being of the population, a huge imbalance between supply and demand. This is influenced by the increase in prices for housing for the elderly, built to order.
United Kingdom
In 2020, the share of nursing homes in the global specialized real estate market was about 3% (student dormitories make up 33%, and apartment buildings - 1%), according to analysts at Knight Frank. Experts predict that this market segment will grow in volume in the next few years: by 2024, the number of private residential homes for the elderly in the UK will grow by 160% from 5,000 to 13,000 units.
The high demand for nursing homes in the UK allows those who have invested in this sector to receive a yield of 8-10% per annum. It works like this: the investor buys an apartment or a package of apartments in a nursing home and enters into a contract with the operator of the house. At the same time, the document prescribes a fixed annual yield and the term of the contract: usually it is drawn up for a period of 10 to 25 years. That is, the investor will know exactly how much he will earn in a year.
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He can also be sure of the stability of income, since the contract with the operator is concluded for a long term, which often includes the option of buyback. This means that, for example, after ten years, the investor can get a guaranteed exit from the investment by forcing the operator to buy back the apartment. Today the cost of apartments in nursing homes ranges from 70,000 to 150,000 pounds sterling.
In the UK, when dealing with nursing homes and student housing, the investor is always represented by a licensed lawyer who reviews the contracts and the property. Moreover, objects of this type can be purchased remotely, for example, while in Russia. This type of commercial real estate is most often chosen by those investors who want to receive passive and stable rental income and secure themselves, for example, a pension in the future.
Germany
Nursing homes are equally popular with investors in Germany, along with hotels, hostels and hospitals. A distinctive feature of the acquisition of objects for the elderly is the direct dependence of the income received on the success of the tenant. After all, the purchase of such real estate and its management requires from the investor no less in-depth knowledge than in the case of redevelopment - you need to be able to understand both the technical component and the field of operational activities, in addition, the lease agreement is concluded for a period of 2-25 years. In Germany, its profitability is 3-5%, especially when it comes to Berlin, Frankfurt, Hamburg and Munich.
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Other countries
In France, investments in the purchase of nursing homes are also very popular due to the demand for such real estate and the high deficit in this market segment. Especially popular are residences for senior citizens with reduced mobility - a hybrid of a hotel and a hospital, the most interesting type of real estate from an investment point of view.
Some countries, where nursing homes have not yet become widespread, are planning to develop this area, for example, in Dubai in the UAE. In this emirate, such facilities can have an advantageous location, high-quality organization of access to medical services and a high level of everyday comfort. At the end of 2020, a new visa program for people over the age of 55 was launched in Dubai. According to the local statistical office, 170,000 such foreigners live in the emirate. At the same time, 12% of the population is between the ages of 45-54 and is approaching retirement, and immigrants make up almost 92% of the population of Dubai. Thus, very soon, real estate for the elderly in this emirate will be especially in demand.
Thank you for your help in preparing the material:
Ekaterina Demidova, expert at DM Group
Elena Utyumova, director of the "INDOM" company
