Private investment is expected to increase supply as the elderly population is projected to double by 2050
Cushman & Wakefield (C&W) announces the publication of its latest study on the senior housing market in Europe. The results of this edition reflect the aging of European countries and highlight countries like Portugal, which lack the means to cope with the rapid aging of their population.
The study, conducted by Cushman & Wakefield’s Valuation & Advisory and Development & Living teams, found that the average percentage of Europeans over 80 years old is 6%, with Portugal above average at 6.8%.
The analyzed data indicates that this figure is expected to increase significantly in the coming years in Portugal, with 12.7% of the population reaching 80 years old by 2050. This means that Portugal, along with countries like Italy and Spain, will need to strengthen its supply of senior residences to ensure the well-being and quality of life of the aging population, as the country currently has only 104,700 beds distributed across 2,570 senior residences (public, non-profit, and private).
Although the majority of the market is still dominated by non-profit institutions, the private sector accounts for 25% of the available beds for elderly accommodation, and the trend is that international investment will start to gain more weight in national senior residences - with prime yields for healthcare-related properties estimated at around 5.75% in 2023, while offices and retail reached around 5.00% and 4.75%, respectively.
The four largest private operators in this market in Portugal, managing a total of 2,680 beds across 30 senior residences, are the Residências Montepio group (1,007 beds | 8 residences), Emeis (FKA Orpea | 815 beds | 10 residences), DomusVi (470 beds | 5 residences), and Naturidade (376 beds | 7 residences).
For Ricardo Reis, Director of the Valuation & Advisory department at Cushman & Wakefield Portugal, “we have observed a growing interest in the senior accommodation sector due to the demographic situation in our country and the lack of supply. We believe that we will see an increase in private investment in this area, as evidenced by the latest figures: the volume of investment in healthcare-related properties in Portugal doubled from 125 million euros in 2020 to around 250 million euros in 2021, then began to decline to 115 million euros in 2022, and fell below 20 million euros in 2023.”
Although the market faces challenges such as high construction costs and political uncertainties, demographic trends and the increasing focus on ESG criteria present opportunities for strategic investments, the study reveals. It also concludes that as the population continues to age, the demand for quality senior residences and care facilities is likely to increase, making this sector a crucial area for future investments.
Ricardo Reis also argues that “the country must prepare for the growth in the number of elderly people needing accommodation and offer them conditions that allow them to live with dignity. The solution may involve the synergy and expansion of entities already present in the national market. However, a well-structured public plan of incentives for public and private development, combined with support for Portuguese families, will be necessary.”
