ADVANCED AGEING IN THE 21ST CENTURY IN EUROPE: EXPECTATIONS FOR HEALTHCARE REAL ESTATE - AviaRent ...
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ADVANCED AGEING
IN THE 21 ST CENTURY
IN EUROPE:
EXPECTATIONS FOR
HEALTHCARE REAL ESTATE
JANUARY 2019PAGE
EMERGENCE OF ISSUES
INVOLVED IN ADVANCED
OLD AGE
PAGE
SURVEY: PERCEPTION
OF OLDER SENIORS
PAGE
LIVING AT AN ADVANCED
AGE: A NEW DEMOGRAPHIC
AND PROPERTY PARADIGM
SENIORS TORN BETWEEN THE PAGE
DESIRE FOR INDEPENDENCE AND
EXPECTATION OF DEPENDENCY
THE EUROPEAN
PAGE ASSISTED CARE MARKET:
A SECTOR UNDERGOING
TRANSFORMATION
PAGE
FACILITIES FOR
DEPENDENT
SENIORS
THE CHALLENGES
FOR REAL-ESTATE
PAGE INVESTORS
WHERE TO INVEST? AGEING PAGE
AND METROPOLISATION,
PRIMONIAL REIM’S SCORING GRID
2 3EMERGENCE OF ISSUES
INVOLVED IN ADVANCED SURVEY
OLD AGE POPULATION OF EUROPE 2015-2050* (IN %)
PERCEPTION
P
opulations are ageing in all Euro-
OF OLDER
OF WHICH 80 AND OVER 5 11
pean countries. As of 1 January
2018, the European Union’s 65 YEARS AND+ 19 29
population was 510 million.
Between 2015 and 2050, the
SENIORS
15-64 YEARS 65 57
European population of persons older than
80, will expand from 27 million to almost
0-14 YEARS 16 14
59 million, an increase of 32 million. Very
old persons made up 5% of the population 2015 2050
in 2015, a figure expected to rise to more
* Source : Eurostat
than 11% by 2050. The age pyramid will
thus undergo a profound change towards The issues of ageing well, better care for seniors,
an older demographic structure. Medical EUROPEAN UNION POPULATIONOLDER THAN 80**
progress and the improvement in living (IN MILLIONS) and suitable and well-designed lodging for them
conditions could also lead to longer life 58,7 have never been more pressing, given the growing
spans and, hence, an ageing in the popu-
lation, that will continue over time.
48,1
challenge posed by the ageing of the population in
37,7
26,9 30,4 Europe. So to better understand how seniors see
Alongside the ageing of the population, themselves in the future at a very advanced age,
the number of elderly dependent persons
will also rise. As they lose the ability to live Primonial REIM commissioned a survey by BVA Opinion
autonomously, they will need some form of of 4 000 seniors in the four largest euro zone countries
assistance.
2015 2020 2030 2040 2050
(France, Germany, Spain, and Italy).
From 80 on, dependency becomes more ** Source: Eurostat, Primonial REIM Research
pronounced, reaching a critical threshold
at 85, including an increase in more LIFE EXPECTANCY IN EUROPE**
serious dependency (mental and physical) WOMEN MEN
through the development and increased AGE
detection of neurodegenerative diseases. 85
80
SURVEY OF 4002 EUROPEANS AGED 60 YEARS AND OLDER:
75
70
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
FR AN C E : G ERMAN Y : S PAIN : ITALY :
** Source: Eurostat, Primonial REIM Research 1 000 P ERS O N S 1 000 P ERS O N S 1 002 P ERS O N S 1 000 PE RSONS
Survey conducted online by BVA from 17 July to 3 August
4 5SENIORS AND HEALTH HOUSING:
Seniors are in rather good shape but are
concerned about their health.* AN INEVITABLE
In the European countries surveyed, almost
ARE YOU CONCERNED ABOUT YOUR HEALTH?
BASE : 4 002 RESPONDENTS CHALLENGE FOR REGARDING LODGING FOR THE ELDERLY, IF YOU WERE TO
eight out of 10 seniors believe they are in
good health. And yet, most of them (66%)
THE ELDERLY REQUIRE DEPENDENT CARE, WHICH OF THE FOLLOWING
BEST DESCRIBES YOUR SITUATION?
Before reaching the age of 80, elderly per-
cite health as their main concern. 33NO
% 66 %
sons do not feel that housing is a priority
BASE: 4002 RESPONDENTS
YES
59% of senior surveyed cited good health
as necessary for ageing well, far ahead of
issue. 83% of those surveyed have not 93% You or your loved ones have not researched the various
types of lodging for the elderly
looked into it, and 58% admit they have
remaining active (39%) and being free of not given any thought to the types of lod-
financial needs (35%). BIEN VIEILLIR, C’EST AVANT TOUT POUR VOUS… ging available for seniors. There are two 58% You or your loved ones have not thought about it. It’s not
a concern for the moment.
BASE : À TOUS (4002 RÉPONDANTS) main reasons for this:
• A probable case of denial, along with the
belief that they can stay home as long as 1% You or your loved ones have put
in requests for lodging.
59% 39% possible;
• The lack of demand in southern Europe,
where the elderly often are very often
22% You or your loved ones have thought about where
to live in your advanced age.
Being spared serious Remaining housed by their families.
health problems active
11% No opinion
However, seniors acknowledge that, soo-
ner or later, they will have to deal with the
35% 28% touchy issue of a place to live, as frailty or 1% You now live in a facility for the elderly.
a form of dependency sets in.
Source: BVA Survey, 2018
Being free of financial Growing old among
need my loved ones
EXTREME OLD AGE: The total is higher than 100 as multiple answers were possible
LITTLE WORRY
BEFOREHAND EXPECTATIONS
BUT ALSO LITTLE WHO ARE YOU COUNTING ON THE MOST TO ASSIST YOU
FOR LODGING
In three countries, three criteria appear
PLANNING AND MAKE YOUR LIFE EASIER AS YOU GET OLDER?
BASE : À TOUS (4002 RESPONDENTS) to be primordial in choosing an establish-
Almost two thirds of seniors are looking ment: quality of staff (43%), price (41%),
forward to their advanced years serenely, and the level of care (39%). Seniors also
but their degree of planning diverges believe it is very important that the buil-
considerably from one country to the next. dings be secure but also opened to their The findings of this Primonial REIM/BVA survey
VOTRE YOUR environment, connected to the world via show how important it is for healthcare property
YOURSELF THE STATE
This feeling about the future depends SPOUSE CHILDREN internet, particularly in order to main- professionals to remain committed to building
more on the senior’s personal situation –
his state of health, level of income, close
relationships – than whether he/she has
OVERALL
AVERAGE
37 % 32 % 21 % 2 %
tain contact with the family. Respondents
voiced support for a hybrid solution, with
senior housing, both in renovating existing facili-
ties and developing new solutions. Each situation
greater modularity in healthcare and ser- is different, with its own needs and expectations.
concrete arrangements to prepare for this
stage of life. The level of planning varies
widely from country to country.
27% 52 % 12% 2%
vices for more flexible assistance, all of
this in an atmosphere that is as close as
possible to “being at home”.
This requires innovative and varied solutions.
Cultural divides also play a big role. While 35% 29% 28 % 1%
the French rely primarily on themselves for
their long-term care arrangements, Spa- 40% 26% 21% 2%
niards rely first on their spouses, and Ita-
lians on their children. Inter-generational
solidarity appears to be more prominent in
Southern Europe, which limits the uncer-
48 % 21% 23% 2%
tainties over future lodging.
Source: BVA survey, 2018
6 7SURVEY CONDUCTED BY PRIMONIAL REIM RESEARCH DEPARTMENT
LIVING AT AN ADVANCED AGE: SENIORS TORN BETWEEN THE
A NEW DEMOGRAPHIC AND DESIRE FOR INDEPENDENCE
PROPERTY PARADIGM AND EXPECTATION OF
DEPENDENCY
N ew technologies and medical
progress have steadily pro-
longed life expectancy, and
the ageing of the population
is becoming one of the major challen-
ges of the 21st century. The economist
John Maynard Keynes once said “In the
DEMOGRAPHIC TRENDS AND REAL-ESTATE
DEVELOPMENT FOR SENIORS
DEMOGRAPHIC TRANSITION:
FROM BABY BOOMERS
TO RETIREES T he proportion of the elderly cared
for by the family (children or close
relatives) or institutions varies
from one country to another.
CARE FOR THE ELDERLY (+ THAN 65)
BY THE FAMILY IN 2017*
LOW COHABITATION
COHABITATION IN THE EUROPEAN AVERAGE
end we are all dead” This famous quote The structure of the family influences this HEAVY COHABITATION
finds special resonance in addressing the proportion in nuclear families (predomi-
long-term challenges of the ageing of the nant in Greater Paris), stem families (in
population. SOCIOLOGICAL METROPOLISATION: Germany) or community-based families
TRENDS IN FAMILY URBAN (northern Italy). However, in the past de-
RELATIONSHIPS CONCENTRATION cade, generally speaking, the family’s role
As the baby-boom generation gradually
reaches retirement age in Western coun- with the elderly has shrunk in favour of
tries, dependency is becoming a key issue. institutional and social support.
The use made of senior establishments
varies with each personal situation but also The degree of government involvement
with cultural traditions. However, whether may explain the divergence between
the family is nuclear (i.e., based on the countries in caring for the elderly. Mo-
reover, the expected ageing of the popu-
couple) or extended (based on the per-
manence of the family line), it is becoming
REAL ESTATE lation is correlated to the issue of loss of
increasingly rare for several generations to FOR SENIORS autonomy in older persons. This issue will
live under the same roof. This change in become increasingly keen in the coming
paradigm has led to increased demand for Source: Primonial REIM Research years and must be taken into considera- *Or the last year that figures are available
services and housing for seniors. tion. Sources: Primonial REIM Recherche, Eurostat
We believe that the demographic tran- For example, according to a WHO report
from 2017, worldwide about 50 million DEPENDENCY: A MAJOR CHALLENGE
sition, sociological trends and metropo- ON A EUROPEAN SCALE
lisation are creating a new paradigm for per¬sons are suffering from a neurode-
DEATHS OF RESIDENTS DUE TO A DEPENDENCY-LINKED DISEASE
investing in healthcare properties. In this generative disease that can lead to de- (INCLUDING ALZHEIMER’S) 2015
article, we look in particular into nursing pendency. An estimated 5 to 8 per cent of BELOW THE EUROPEAN AVERAGE
homes (or “care homes with nursing”, as those older than 60 suffer from a disease ABOVE THE EUROPEAN AVERAGE
they are now called). that can lead to dependency. Alzheimer’s
disease is the most common of these, with
60% to 70% of cases. About 10 million
new cases of such diseases are diagnosed
each year. This number is expected to ex-
ceed 80 million in 2030 and 150 million in
2050. So society must begin now to anti-
cipate the challenges of the ageing of the
population.
Sources: Primonial REIM Research, Eurostat
8 STUDY CONDUCTED BY THE PRIMONIAL REIM RESEARCH DEPARTMENT 9THE EUROPEAN ASSISTED FACILITIES FOR
CARE MARKET: DEPENDENT SENIORS
A SECTOR UNDERGOING
TRANSFORMATION H ealthcare (nursing homes, se-
nior service residences, medical,
surgical and obstetrics centres;
follow-up care and rehabilita-
HEALTHCARE SPENDING FOR LONG-TERM
CARE WITH LODGING
SPAIN ITALY FRANCE GERMANY
T
RATES FOR DEPENDENT CARE * tion centres, and psychiatric hospitals) is IN MILLIONS ANNUAL
OF EUROS % CHG.
he European long-term care sec- a heavily regulated sector in Europe, in
BELGIUM : GERMANY : 400 20
tor is similar from one country to €110 AVERAGE DAILY RATE €100AVERAGE DAILY RATE both administrative terms and in operating 350 15
another: standards. Generally speaking, long-term 300
60% 40% 35 %
15% dependent care centres require govern- 250 10
LODGING/ FOOD/
- A clear predominance by the public sec- SERVICES
HEALTH-
CARE SERVICES RENT ment authorisation to operate. 200 5
tor and associations, at between 60% 150 0
and 90% of existing beds; FRANCE :
50% In reaction to the number of persons older 100
-5
HEALTHCARE + DEPENDENCY 50
- A private sector that is still fragmented €110 AVERAGE DAILY RATE than 80, the penetration rate – in numbers -10
0
and made up of many independent players; of beds – in nursing homes has declined, 2007 2008 2009 2010 2011 2012 2013 2014 2015
- A few European-scale groups, including 70% 10% and has done so over the past 10 years. Sources: Primonial REIM Research, based on Eurostat and OECD
DEPENDENCY
LODGING/
Korian, Orpea and DomusVi. SERVICES
20% There are about 3 million nursing home beds
HEALTHCARE
There has been pan-European consoli- in the euro zone. The five countries with the
ESPAGNE : most beds are Germany, Belgium, Spain,
dation in the sector. Smaller players are €55 AVERAGE DAILY RATE
generally taken over by national leaders France and Italy, with a total of 2.3 million STRUCTURE OF HEALTHCARE
AND ASSISTED-LIVING SYSTEM
before these are, in turn, taken over by 80% 20% beds. Professionals estimate that these
even larger international players. The HEALTHCARE /
LODGING / DEPENDENCY ITALIE : countries will be about 450,000 beds short STRU C TU RE OF
€90 AVERAGE DAILY RATE by 2025-2030
main players are French groups such as SERVICES HEA LTHC A RE A ND IM M O B ILIE RS
A SSISTED-LIV ING
Orpea and Korian, and DomusVi.
Source: Primonial REIM
55% 45% This amounts to several billion euros in in-
SYSTEM
LODGING / HEALTHCARE + Nursing homes (equivalent to French “EHPAD”)
Long-term care establishments’ rates are Research, based on company figures SERVICES DEPENDENCY vestment. However, European governments ASSISTED LIVING
regulated in Eu¬rope, as governments are under severe budget constraints. The Senior services centres
wish to rein in healthcare expenditure. private sector is likely to play a growing role Medical, surgical and obstetrics centres
BRIEF FINANCIAL REVIEW OF in the coming years.
Daily rates break down into two broad THE MAIN COMPANIES (2017)*
HOSPITALS AND
MEDICAL CENTRES Follow-up care and rehabilitation centres
categories: Psychiatric hospitals
RAMSAY
- medical care and spending, which is OPE RATOR SANA
ORPE A KORIAN KLINIKE N GÉ NÉ RALE CAPIO DOMUSVI
DE SANTÉ Source: Primonial REIM Research
generally financed by public resources,
and national or regional insurance; REVENUES (M€) 3 138 3 135 2 570 2 234 1 537 1 294
- a contribution correspon¬ding gene- EBITDAR*(M€) 846 821 242 448 105 335
rally to lodging, meals, other food and *EBITDAR: Earnings before Interest, Taxes, Depreciation, Amortisation and Rent)
other services. The latter are financed Source: Primonial REIM Research, based on company figures
by the resident or patient himself or by NURSING HOME BEDS
private insurance. MERGERS & ACQUISITIONS IN THE HEALTHCARE SECTOR SINCE 2016*
ESTIMATED NUMBER OF BEDS TO BE CREATED BY 2025/2030
CURRENT NUMBER OF BEDS
PENETRATION RATE (AS A % OF THE POPULATION 80 AND OVER)
IN
MILLIONS %
1,5 25
1,3 20
1,0
15
0,8
10
0,5
0,3 5
0,0 0
GERMANY FRANCE ITALY SPAIN BELGIUM
Sources: Primonial REIM Research, based on figures from operators, Eurostat and OECD
Sources: Primonial REIM Research, companies
10 STUDY CONDUCTED BY THE PRIMONIAL REIM RESEARCH DEPARTMENT STUDY CONDUCTED BY THE PRIMONIAL REIM RESEARCH DEPARTMENT 11THE CHALLENGES WHERE TO INVEST? AGEING
FOR REAL-ESTATE INVESTORS AND METROPOLISATION,
PRIMONIAL REIM’S
B ased on the aforementioned items,
expanding the supply of senior
housing will be a major challenge
in the coming years.
OUTLOOK FOR HEALTHCARE PROPERTY
INVESTMENT VOLUMES IN 2018 (€ M)*CONCLUSION TERMINOLOGY
O
10-YEAR GOVERNMENT BONDS:
n the one hand, we believe that Based on our research, we believe that Debt securities issued by a government for
the demographic transition, European healthcare property investors 10 years, which are commonly accepted as
sociological trends, and metro- should focus on the following: a benchmark risk-free rate.
polisation are giving rise to new
needs that make investment in senior - Properties leased to international-scale HEALTHCARE PROPERTY INVESTMENT
establishments a must. On the other hand, players who take part in sector consoli- VOLUME:
high regulatory barriers to entry give the dation; Total volume of healthcare properties
sector’s most established players a clear - Establishments located in areas with (assisted living centres and hospitals)
edge. high purchasing power and strong acquired by an investor.
demographic potential in the coming
The lack of nursing homes beds in the years, in order to secure leases; YIELD:
coming years will require several billion - The quality of locations in city-centres or Ratio between a building’s gross or net
euros in investment. Because this demo- near large metropolitan areas, in order to income and the capital committed up front
graphic challenge is so massive, public optimise the liquidity of properties when by the buyer (acquisition price plus closing
healthcare funding will be hindered they are divested. costs and taxes).
by budgetary constraints, especially in
Europe. The private sector will therefore From investors’ point of view, the diver- NURSING HOMES
have to step in and play a big role in the sification of healthcare systems and the (EQUIVALENT TO FRENCH “EHPAD”):
coming years. hybrid nature of funding (public and pri- Établissement d’Hébergement pour Per-
vate) tend to lower the risk. That’s why, sonnes Agées Dépendantes (the reco-
investment in healthcare property is best gnised term in France for a nursing home
looked at on a European scale. dedicated to dependent individuals)
MEDICAL, SURGICAL AND OBSTETRICS
CENTRES
FOLLOW-UP CARE AND REHABILITATION
CENTRES
PSYCHIATRIC HOSPITALS
PENETRATION RATE:
Ration between the total number of reti-
rement home beds compared to the total
population 75 or 80 and more.
14 STUDY CONDUCTED BY THE PRIMONIAL REIM RESEARCH DEPARTMENTPRIMONIAL REAL ESTATE INVESTMENT MANAGEMENT
A société anonyme à directoire et conseil de surveillance (joint-stock company with a management board and a supervisory board) with authorised capital of €825,100. Entered into
the Paris Trade Registry under number 531 231 124 00045 RCS Paris, APE 6630Z. Certified by the French Financial Markets Authority (AMF) as a portfolio management company
on 16 December 2011 under number GP 11 000043. AIFM certification on 10 June 2014. Professional card for “Gestion Immobilière” (property management) and “Transactions sur
immeubles et fonds de commerce” (Building and business goodwill transactions) under number CPI 7501 2016 000 007 568, issued on 17 May 2016 by the Paris-Greater Paris CCI
and guaranteed by CNA Insurance Company Ltd, located at 37 rue de Liège; 75008 Paris, France.
REGISTERED OFFICE
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Telephone : 01 44 21 70 00 - Fax : 01 44 21 71 23
www.primonialreim.com.
CONTACT
Research department
Non-contractual document
Henry-Aurélien NATTER - Head of Research
henry-aurelien.natter@primonial.fr
This document is published for information purposes only. It does not constitute an offer from Primonial REIM to buy or sell an investment product or service and is not to be construed as investment, legal or tax
advice. The investment strategies presented herein may not be accessible to all types of investors. The opinions, estimates and forward-looking statements contained herein are subjective and are subject to change
without notice. They are based on data available from official sources. No guarantee is offered that the forward-looking statements contained herein will prove to be correct. No guarantee is offered that said
forward-looking statements are based on accurate and exhaustive figures. Assessment of the information contained herein is left to the reader’s discretion. This document does not contain enough information to
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