Real Asset Insight #6 June 2020

Assisted living set to grow as
sector becomes segmented
As the needs of the elderly expand and change operators
will become more specialised and offer targeted services
‘The one-sizefits-all
model no
longer works: the
way people age
and their state of
dependency has
changed.’
Frédéric Dib, Mozaic
Asset Management
Assisted living is the next big opportunity
in the healthcare sector, experts have told
Real Asset Insight.
‘The one-size-fits-all model no longer works,
because the way people age and their state of
dependency has changed in the last 20 years,’
says Frédéric Dib, president of Mozaic Asset
Management. ‘Instead of putting everyone
into the same home, we are seeing more
segmentation and specialisation and assisted
living is a real growth segment.’
In France and Germany operators are taking a
master lease and taking care of people who are
80-85 but less dependent than residents of a
nursing home.
‘Assisted living is growing very fast in the
Netherlands as well,’ says Kees Zachariasse,
managing director Netherlands, at Cofinimmo.
It is a less complicated investment in terms
of the strict and sometimes unpredictable
regulations of medical facilities, he adds.
‘There are 600 assisted living facilities in
France and demand is really growing,’ Dib says.
‘Nursing homes will still be needed, of course,
and new home care models will be developed.’
Assisted living will take different forms, some
smaller scale and some larger communities
depending on need and location, but all will
offer targeted services to residents.
A snap poll at the online briefing revealed that
70% of market experts see ‘light touch’ senior
housing as the most resilient investment option
in the sector, with 50% opting for traditional care
homes and 48% for medical facilities.
MORE NUANCED OFFER
The healthcare sector is undergoing constant
change and improvement and the offer is
becoming more nuanced. In future there will
be more mixed-use developments, says Ron
van Bloois, partner at HEVO: ‘We will see
primary care in combination with senior living,
maybe medical rooms on the ground floor and
residential above.’
The biggest, most mature markets such as
Germany and France remain attractive locations
for big investors looking for large-scale
transactions, but other countries in Europe
offer opportunities.
‘Italy, Portugal and Spain have well-established
markets, Belgium has a very sophisticated
infrastructure, the Netherlands has many
independent operators, while the Nordics is a
less investable market because of the dominance
of state provision,’ says Keith Harris, executive
director, operational real estate, at CBRE.
Pandemic highlights importance of healthcare sector
Covid-19 has hit the healthcare
& senior housing sector hard,
but it has also shone a light on
its importance.
‘The health crisis has had an adverse
impact, with declining occupancy and
increasing costs, but the fundamentals
remain strong and the momentum remains
in force,’ says Keith Harris, executive
director, operational real estate, at
CBRE. ‘Tens of thousands of quality beds
will be needed every year in Europe at
least until 2035.’
It has been a difficult time for nursing
homes, where the pandemic has had a
disproportionate impact. In the short term,
morale is low and the increased scrutiny
and focus on safety will lead to higher
costs, but longer term supply and demand
fundamentals will reassert themselves.
‘It has been a dramatic time, but the reality
is that the human cost has been far greater
than the financial cost,’ says Frédéric Dib,
president of Mozaic Asset Management.
RESILIENT SECTOR
Despite the extremely high number of
coronavirus-related deaths in nursing
homes and the stop on recruiting of new
residents during the crisis, the drop in
occupancy rates has been 10% at most,
says Dib: ‘This means a drop from 99%
to 89% occupancy rates, which is above
54 Real Asset Insight | Issue 2 July 2020