Investing in senior living
An urgent response to the aging population – and an unstoppable demographic trend that opens opportunities in the real estate sector
Experts: Laura Díaz, healthcare director at Colliers; Nuria Béjar, national healthcare director at Savills; o Gustavo Martínez, partner and director of Beka Real Estate;
by julia gil
Population aging in Spain is advancing steadily, driven by longer life expectancy and a sustained reduction in the birth rate. According to the latest projections of the National Institute of Statistics (INE) (link to the study), by 2071 men will live on average, to 86 years of age and women to 90. In addition, the percentage of people over 65 years of age is expected to exceed 30% of the population by 2050.
In this context, the traditional model of care for the elderly is beginning to show signs of exhaustion, making way for new forms of residence that combine autonomy, assistance and quality of life. Among these, “senior living” is emerging as a key alternative. However, this model is still at an incipient stage in Spain, which generates a clear call for investment.
A STRUCTURAL DEFICIT AND A MARKET OPPORTUNITY
The imbalance between supply and demand is already evident. Laura Díaz, healthcare director at Colliers, warns that “the shortage of elderly care homes in Spain, and the need for new projects, represents a clear opportunity for investors”. The firm estimates a shortfall of 100,000 beds and an investment of more than 2 billion euros over the next three years.
To address this situation, Diaz explains that investors are opting for two strategies: investment in Greenfield projects, designed from scratch to meet new demands in sustainability and mixed models; and investment in assets to be converted, such as hotels, hospitals or offices that have been outgrown or are underutilized, allowing for significant savings in construction costs.
MARKET IMMATURITY AND REGULATORY CHALLENGES
But the road to a consolidated market is not without obstacles. One of the biggest challenges is the absence of a clear regulatory framework governing senior living, making administrative procedures difficult and slowing down the arrival of investment. In the case of developers, “the lack of a clear regulation on the classification of senior living can affect the process of obtaining licenses, which can take longer, with the consequent increase in investment in each project,” adds Díaz.
From Savills, Nuria Béjar, national healthcare director, agrees that the challenges “are real estate and operational”. And she adds, “demand has no debate; it grows and grows and what is the real challenge is to generate an affordable and scalable model and market what it means to live in your home in a senior living community”.
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