The high demand for senior residences

Private investment should lead to an increase in supply in view of the prospect of an aging population doubling by 2050

Cushman & Wakefield, a leading global real estate services consultancy, recently carried out a study of the senior home market in Europe. The results mirror the aging of European countries and place countries, such as Portugal, with a lack of means to cope with the accelerated aging of their population.

The study, carried out by the Valuation & Advisory and Development & Living teams, from Cushman & Wakefield, recognized the average percentage of Europeans over 80 years old at 6%, with Portugal being above average - with 700 thousand (6.6%) of citizens at this age.

The analyzed data indicate that this value should increase considerably in the coming years, in Portugal, with 12.7% of the population reaching the age of 80 by 2050. This means that Portugal, together with countries such as Italy, or Spain, has to fortify its offer of senior accommodation to guarantee the well-being and quality of life of the aging population, since, at the moment, the country only has 102,300 beds, distributed over 2,540 senior homes/residences (public, non-profit and private).

Although the majority of the market is still dominated by non-profit institutions, the private sector is already responsible for 27% of the beds available for the accommodation of the elderly, and the trend is that international investment will begin to gain more weight in national senior residences - with the prime yields for properties linked to the healthcare sector to be estimated at around 5% in 2021, while offices and retail reached around 3.75% and 4.25%, respectively.

The four largest private operators in Portugal in this market, which manage a total of 2,440 beds, divided into 28 units of senior residences, are the Residências Montepio group, Orpea, Naturidade and Domus VI.

For Ricardo Reis, Director of the Evaluation & Advisory department at Cushman & Wakefield Portugal “we have seen a growing interest in the area of senior accommodation due to the demographic situation in our country, and the lack of supply, so we believe that we will see an increase in the private investment in the area, this perspective being easily verified by the most recent figures: the volume of investment in real estate related to the health sector, in Portugal, doubled from 125 million euros in 2020, to around 250 million euros, in 2021. ”

Ricardo Reis also argues that “the country must prepare itself for the growth in the number of elderly people in need of accommodation, and offer them conditions that allow them to have a dignified life. The solution may involve synergy and expansion of entities already present in the national market. However, a well-structured public plan to stimulate (incentives) for public and private development will be necessary, combined with support for Portuguese families”.