2022 is a time of change in Spain and the world. The global pandemic taught humanity new lessons, values and insight into the younger generation. Advanced technologies and communication systems are now the main tools of this new era.
Innovations in the housing market are connected to new ways of life. It’s now considering the whole population’s different housing needs. One of these is Senior Living or housing for the elderly.
We’ll tell you what this is and why it’s profitable to invest in housing for the elderly.
Content
- What is Senior Living?
- Types of Senior Living housing
- Market participants
- Investing in housing for the elderly
- Why is it worth investing in housing for the elderly?
- Return on investment
- What are the cons of this development area?
- Conclusions
What is Senior Living?
Senior Living is special housing for the elderly and means cohabitation in a common living space. Senior Living is a space where pensioners have housing, private area, and general services to meet their various needs.
Senior Living started 5 years ago in Europe, mainly in France and the UK. It began in Spain in 2020. Spain’s high quality of and life expectancy gives this investment model great development potential and returns.
In these complexes or buildings, elderly residents use common spaces like large gardens, multipurpose meeting and recreation rooms, a help desk, and an around-the-clock medical office. Residents have cooking, entertainment, cleaning, household, and medical care services.
In Spain, sometimes public authorities work with municipalities to make Senior Living cooperatives for the poor.
It’s easier for older people to take care of themselves and cope with loneliness in Senior Living homes.
Types of Senior Living
There are different housing types for people over 60-65 years old. These 4 are the most common:
- Senior Living Cohousing
A group of people with common interests form a cooperative and build a house to live in future. The prices are affordable and the group will buy large enough land or property.
- Senior Living Ecoliving
A developer will sell this housing for the elderly. It also has common living areas.
- Senior Living Resort
This is usually on the coast for foreign residents. It provides luxury service and comfort.
- Savills
These are homes for the elderly with medical care.
Market participants
The Senior Living market is growing. Companies like Forum Mare Nostrum and Las Arcadias offer this type of housing. Cooperatives like Trabensol or Vitápolis were created by the elderly to promote their complexes. Many other companies are developing Senior Living in Spain. These are:
- National management companies from nursing homes that have seen the growing need for this housing;
- International operators who want to enter the Spanish market because of its potential;
- Asset owners and managers who want to expand into the housing market;
- Investors who want to create a management company;
- Developers and investors from other parts of the housing market also see the investment potential.
Investing in housing for the elderly
This type of housing is quickly developing today.
Housing for the elderly can bring in good profits. Many large international investors have noticed this.
At the beginning of 2020, 64% of all elderly housing investments in Spain were from foreign capital. And in the first six months of 2021, total investments were 4,000,000,000 euro. This market has been stable despite the pandemic.
Why is it worth investing in housing for the elderly?
It’s important to look at the general statistics for ROI in this sector:
- In the 21st century, there’s been a significant change in how societies age. In 1950, there were 375,000,000 people over 60. By 2050, forecasts say that this will be 2,100,000,000.
- People over 60 are 20 to 24% of the population in Spain.
- By 2050, the main age group in the country will be people from 70 to 90 years old.
Medical and technological advances will improve the elderly’s quality of life. So, the idea that aging comes with disability and dependency is changing. The elderly are progressing in many ways and living modern lives.
Modern housing projects support the older generations’ values. They are public and cooperative spaces for the over-65 age group.
Housing for the elderly in Spain is an innovative life model based on fresh ideas. Independence, dignity, autonomy, and participation in public are all important values.
This type of housing for a community of the elderly is a new idea of voluntary cooperation. These are public spaces where everyone will feel useful and active. This is important because older generations often painfully live alone or are isolated.
This new model allows the elderly who are too active to live in a nursing home to stay healthy and happy after finishing their retirement. It’s a good option for a retirement plan that ensures that you won’t be lonely in your old age.
Return on investment
Senior Living’s profitability is 8-10% depending on where the property is and it's quality. This is higher than the normal 7.2% in 2021 in Spain.
Since 2020, investments in housing for the elderly have been stable. Investors will remain interested in this type of housing in the future.
What are the cons of this development area?
Investors must be aware of any difficulties this sector faces. Strict Spanish laws do not allow changing land use. This is a major obstacle for these housing projects for pensioners in the country.
There also isn’t much background cohabitation information. This living model is new so the elderly who don’t have experience or information about the law might face problems. It can also be tough to understand administration service rules, who is responsible for what, and liability insurance. There are general civil laws to help with this but to avoid problems in the future, there’ll be a special decree to regulate this sector.
Management companies that build homes for the elderly already face problems in the project development. Many investors realize that the project they have put money in doesn’t meet the tenants’ needs. You can solve this problem by pre-ordering a project evaluation and checking all information with Spanish real estate specialists.
Conclusions
In the world today, cultural norms affect all parts of life, all areas and all generations of society. This includes new real estate models. Housing for the elderly is a perfect example of how once forgotten, the 65+ generation will be significant in the future. They will be a large part of the population with valuable contributions to society. The elderly segment will also be a new investment opportunity.
This real estate sector isn’t the usual and so it has unique risks. Chat with an expert to protect your interests when you choose and invest in Senior Living in Spain. Find a professional who speaks Spanish and your spoken language. This is important to help you understand everything when you invest in your future!